The US dollar weakened on Tuesday, July 14, 2026, after fresh inflation data showed price pressures in the world's largest economy eased more than expected, reducing expectations of an immediate interest rate hike by the US Federal Reserve.

The fall came despite heightened geopolitical tensions in the Middle East, which had initially pushed oil prices sharply higher following fresh attacks near the Strait of Hormuz.

However, crude prices later retreated after US President Donald Trump softened plans to impose a proposed 20 per cent levy on vessels passing through the strategic shipping route.

The easing in oil prices, combined with softer inflation figures, weighed on the greenback as investors scaled back expectations of tighter monetary policy.

Inflation data changes market expectations

Per the US Labour Department, consumer inflation slowed to 3.5 per cent year-on-year in June, down from 4.2 per cent in May, marking the sharpest moderation in price growth in six years.

Core inflation, which excludes food and energy prices, also eased to 2.6 per cent from 2.9 per cent a month earlier, reinforcing expectations that inflationary pressures may be easing.

Kathleen Brooks, Research Director at trading platform XTB, said the latest figures significantly reduced the likelihood of a Federal Reserve rate hike at its July policy meeting.

After the release of the inflation report, market expectations for a July rate increase plunged from around 40 per cent earlier in the day to just 13 per cent. However, investors still expect the Fed could raise rates at its September meeting.

Oil prices retreat after early spike

Brent crude briefly surged by as much as 5 per cent, climbing to around $87 per barrel after reports of attacks on two vessels near the Strait of Hormuz renewed fears over global oil supplies.

The gain lost steam later in the session after Trump backtracked on his proposal to impose new shipping levies, although he maintained his warning that a naval blockade on Iranian ports is still viable.

The retreat in oil prices helped calm inflation concerns and contributed to the dollar's decline against major global currencies, according to a report by Punch.

Markets react as earnings season begins

However, US financial markets opened mixed as investors weighed cooling inflation against the start of the second-quarter earnings season.

As JPMorgan Chase reported a record $21.2 billion quarterly profit, lifting confidence in the banking sector, IBM shares plunged about 23 per cent after the technology giant warned that second-quarter earnings would miss expectations due to shifting corporate spending patterns.

Naira depreciates at NFEM

The larger technology sector remained strong, with semiconductor stocks posting robust gains, while investors continued to monitor global economic data and central bank signals for clues on the direction of interest rates.

Meanwhile, despite the dollar's global weakness, the naira depreciated across Nigeria's official and parallel foreign exchange markets, reflecting continued pressure on the local currency.

According to data from the Central Bank of Nigeria (CBN), the Nigerian currency closed at N1,382 per dollar, down from N1,380.500 the previous day.