(fxcue news) - A softening in price pressures in the U.S. that renewed rate cut expectations aided the U.S. dollar's decline against major currencies during the week ended August 16. The U.S. dollar slipped against the euro, the British pound, the Australian dollar, the Canadian Dollar and the Swedish Krona but held its ground against the Japanese yen and the Swiss franc. The six-currency Dollar Index also recorded a decline for the fourth week in a row. The Dollar Index or DXY which measures the Dollar's strength against a basket of six currencies viz the euro, the British pound, the Japanese yen, the Canadian dollar, the Swedish krona and the Swiss franc declined 0.72 percent during the week ended August 16. The strength of the euro, which has a weight of close to 58 percent in the 6-currency index contributed the most to the decline in the Dollar Index. From the level of 103.14 as on August 9, the DXY slipped to 102.40 in a week's time. The DXY touched the week's high of 103.31 on Monday and the week's low of 102.27 on Wednesday. Data released on Tuesday by the U.S. Bureau of Labor Statistics showed factory gate prices in July falling to 0.1 percent from 0.2 percent in the previous month. Markets had anticipated the month-on-month producer price inflation to be steady at 0.2 percent. The core component surprisingly recorded a flat reading whereas markets had expected it to decline to 0.2 percent from 0.3 percent in the previous month. Data released by the U.S. Bureau of Labor Statistics on Wednesday showed annual headline consumer price inflation declining to 2.9 percent in July. It was expected to be steady at 3 percent. The core component also declined as expected, to a 3-year low of 3.2 percent from 3.3 percent in June. Inflation on a month-on-month basis rebounded as expected to 0.2 percent from -0.1 percent in June. The core component also edged up on the expected lines to 0.2 percent from 0.1 percent in June. The easing price pressures dragged down the DXY to 102.61 at close on Tuesday and 102.60 on Wednesday. Meanwhile, data released by the U.S. Department of Labor on Thursday showed the number of people claiming unemployment benefits in the U.S. dropping to 227 thousand in the week ended August 10, versus market expectations of 235 thousand and previous week's level of 234 thousand. Data released by the U.S. census Bureau on Thursday also showed retail sales in the U.S. rebounding 1 percent in July, far surpassing the 0.3 percent anticipated by markets. Retail Sales had declined 0.2 percent in the previous month. The twin data releases reinforced the strength of the U.S. economy, helping the DXY rise to 103.04 by close on Thursday. However, the DXY plunged again on Friday amidst disappointing updates on building permits and housing starts. Data from the U.S. Census Bureau on Friday showed Building permits decline 4 percent month-on-month in July versus an increase of 3.9 percent in the previous month. Housing starts also declined 6.8 percent versus the increase of 1.1 percent in the previous period. In this backdrop, the DXY eventually declined to close the week's trading at 102.40. The EUR/USD pair rallied 1.03 percent during the week ended August 16, helped by a softer Dollar attributed to renewed Fed rate cut expectations and concerns about the recent spike in inflation in the Euro Area. The euro which was at $1.0916 on August 9 strengthened to $1.1028 by August 16. The pair ranged between 1.0911 and 1.1048 during the week. A recent Reuters poll that predicted the likelihood of ECB cutting rates less than market's expectations also supported the euro. An uptick in U.K.'s inflation in July, albeit less-than-expected and GDP growth in second quarter along expected lines triggered doubts about the Bank of England's rate cut trajectory, helping the pound sterling jump more than 1.45 percent against the greenback during the week spanning August 10 to 16. Strong labor market data that revealed an unexpected drop in the unemployment rate and a larger-than-expected spike in average earnings excluding bonus bolstered the sterling's prospects. The GBP/USD pair which was at 1.2759 on August 9 closed trading on the succeeding Friday at 1.2944. The pair ranged between the low of 1.2746 recorded on Monday and the high of 1.2947 recorded on Friday. The CPI-induced weakness in the U.S. dollar and a higher-than-expected rebound in the consumer confidence reading in Australia helped the AUD/USD pair record a weekly gain of 1.43 percent on August 16. The pair rallied from 0.6572 on August 9 to 0.6666 on August 16. The weekly trading ranged between the low of 0.6565 recorded on Monday and the high of 0.6672 recorded on Friday. Amidst speculation about Bank of Japan's hesitance to hike rates in the midst of profound market volatility triggered by the unwinding of carry trades, the Japanese yen weakened against the U.S. Dollar during the week ended August 16. The USD/JPY pair ranged between 146.07 on Wednesday and 149.40 on Thursday before finishing the week at 147.58, up from 146.61 a week earlier. The yen's decline during the week was despite Japan's GDP growth rate which rebounded 0.8 percent in the second quarter exceeding what the markets had expected. On the currency markets' horizon this week are data releases ranging from minutes of the Reserve Bank of Australia, trade and inflation updates from Japan, manufacturing PMI from Germany, etc. However, the market spotlight is invariably on the FOMC minutes due from the U.S. on Wednesday as well as the monetary policy cues from the Jackson Hole symposium of central bankers that could be expected later in the week. Amidst the strong rate cut hopes, the Dollar Index has decreased to 102.16, versus the level of 102.40 on Friday. The EUR/USD pair has edged up to 1.1036 whereas the GBP/USD pair has edged up to 1.2946. The AUD/USD pair has firmed up to 0.6695. The USD/JPY pair has however fallen to 146.15.