The US Dollar Index slid to 97.40, its weakest level since January, after softer-than-expected June inflation data reinforced market bets on a September Federal Reserve rate cut.

Futures markets now price in an 80% probability of a quarter-point cut next quarter, up from 55% a week earlier, pressuring short-term Treasury yields lower.

The euro and Japanese yen were the main beneficiaries, with the yen strengthening past 148 per dollar for the first time since March on unwinding carry trades.

A softer dollar has provided support to dollar-denominated commodities including gold and copper, though analysts warn the move could reverse if upcoming payrolls data surprises to the upside.