The U.S. Dollar hit a week-low on Thursday against major rivals, leaving behind a rally that saw the greenback surge to a one-year high, and there were multi-week highs for the Australian and New Zealand Dollars.

The Dollar index – measuring the currency against six peers – stayed flat at 94.048, after a 0.53% fall on Wednesday. Earlier in the week, on Tuesday, the Dollar index reached 94.563, the highest since the end of September 2020, following close to a 3% surge at the beginning of last month.

Even though minutes of the Federal Open Market Committee’s September meeting confirmed stimulus tapering is almost sure to get underway this year, the Dollar retreated. 

In addition, the U.S. 5-year, 5-year-forward breakeven inflation rate, reached its highest point in seven years at 2.59% overnight. Moreover, “money markets are pricing about 50/50 odds of the first 25 basis point rate hike by July,” says a Reuters report.

“The USD’s reaction may be an example of ‘buy the rumour, sell the fact,’” Joseph Capurso, according to a strategist at Commonwealth Bank of Australia.

“We consider the FOMC’s assumption of a transitory spike in inflation is wrong. A more aggressive tightening cycle will support the USD in our view.”

Furthermore, the Dollar rose 0.26% to 113.55 Yen, but falling short of the three-year high of 113.80 Yen reached overnight.

Elsewhere, the Euro stayed mainly flat from Wednesday at $1.15935, but previously reached $1.1601 for the first time since 5 October. The Pound moved up to $1.3666, prolonging Wednesday’s 0.55% gain and nearing its highest level this month.

The Australian Dollar rose 0.09% to $0.7387, earlier hitting $0.7396, its highest point since 10 September. Moreover, the New Zealand Dollar edged up 0.16% to $0.6977.