Dollar Extends Losses, Euro Rallies as Traders Reassess Rate Hike Bets

Dollar Extends Losses, Euro Rallies as Traders Reassess Rate Hike Bets
A picture illustration of U.S. dollar, Swiss Franc, British pound, and Euro bank notes, taken in Warsaw, on Jan. 26, 2011. Kacper Pempel/Reuters
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LONDON—The dollar fell further on Thursday to two-month lows after U.S. inflation proved weaker than feared in December, prompting investors to cut crowded long positions in the currency.

The euro was a big beneficiary of the move and extended its rise to as high as $1.1479, up 0.3 percent on the day, while sterling and the yen also added to their gains.