(fxcue news) - The week ended September 13 witnessed the Dollar slip marginally against major currencies in the backdrop of lower CPI readings from the U.S. Though the greenback gained against the euro, the British pound, the Canadian dollar and the Swiss franc, the strength did not suffice to overcome the strength of the Japanese yen and the Swedish krona. The Dollar Index, which measures the U.S. Dollar's strength against a basket of 6 currencies edged down 0.07 percent during the week ended September 13, declining to 101.11 from 101.18 a week earlier. The weekly trading range was much wider, as the Index which had touched a high of 101.84 on Thursday dropped to a low of 100.88 on Friday. According to the data released by the U.S. Bureau of Labor Statistics on Wednesday, headline annual inflation in the U.S. declined to 2.5 percent in August from 2.9 percent in July. With a fifth consecutive month of decline, inflation dropped to the lowest since February 2021. The level pleasantly surprised markets which had expected a reading of 2.6 percent. The core component excluding the volatile fuel and food components remained steady at the over three-year low of 3.2 percent as expected. While headline monthly inflation remained steady at 0.2 percent on expected lines, the core component thereof which was expected to be steady at 0.2 percent unexpectedly edged up to 0.3 percent. Data released by the U.S. Bureau of Labor Statistics on Thursday showed factory gate prices increasing 0.2 percent month-on-month in August versus a downwardly revised flat reading in July and higher than forecasts of 0.1 percent. According to the U.S. Department of Labor's report released on Thursday, the number of people claiming unemployment benefits increased by 2 thousand to 230 thousand during the week ended September 7, matching market expectations. In response to mixed CPI readings, an uptick in producer price inflation as well as a rise in initial jobless claims, the expectation of interest rate traders became mired in uncertainty. On Friday, the CME FedWatch tool showed the likelihood of a 25-basis points rate cut as well as a 50-basis points rate cut in September as evenly distributed at 50 percent each. The euro edged down 0.06 percent against the greenback during the week ended September 13 that witnessed the European Central Bank slash rates by another 25 basis points. The EUR/USD pair closed trading at 1.1076 on September 13, declining from 1.1083 a week earlier. The pair touched a weekly low of 1.1002 on Wednesday and a weekly high of 1.1102 on Friday. The absence of any clear guidance about another rate cut in October by the European Central Bank limited the common currency's losses. The sterling edged down 0.01 percent against the greenback during the week, ahead of the Bank of England's interest rate review and markets unsure of whether the BoE would oblige with a rate cut. The GBP/USD pair which had closed at 1.3123 on September 6 slipped to 1.3122 by September 13. The pair traded between 1.3001 touched on Wednesday and 1.3159 recorded on Friday. The yen surged against the U.S. dollar during the week ended September 13 amidst hints that Bank of Japan was ready to raise rates further. The USD/JPY pair decreased to 140.82 from 142.27 a week earlier pair. The pair oscillated between 143.81 recorded on Monday and 140.28 recorded on Friday even as markets reconciled to the fact that Bank of Japan would not let the market volatility jeopardize its plans to raise rates to combat inflation. A hawkish Reserve Bank of Australia helped lift the AUD/USD pair close to half a percent during the week ended September 13. The Reserve Bank of Australia's monetary policy outlook that sharply contrasted with a dovish pivot by the Federal Reserve helped the pair jump to 0.6703 from 0.6670 a week earlier. The pair traded between 0.6622 on Wednesday and 0.6734 on Friday. Sentiment remains nervy as markets wait for the Federal Reserve's interest rate decision on Wednesday. The CME Group's closely monitored FedWatch Tool that tracks the expectations of interest rate traders now places a 63 percent chance of a half-point cut and a 37 percent probability on a quarter-point easing by the Federal Reserve. The Dollar Index dropped to 100.69 from the level of 101.11 recorded at Friday's close, as markets positioned for a bigger Fed rate cut. The EUR/USD pair has rallied to 1.1131 from 1.1076 on Friday. The GBP/USD pair is at 1.3209, rising sharply from 1.3122 recorded at the end of the previous week. The USD/JPY pair is at 140.38, slipping from Friday's close of 140.82 as markets wait for the inflation update on Thursday as well as the hawkish Bank of Japan's interest rate verdict on Friday. The AUD/USD pair has also strengthened to 0.6744 versus 0.6703 on September 13.