The US dollar index initially dipped but later rebounded to trade above 98.4 on Tuesday, as the CPI report did little to shift market expectations regarding the Fed's next policy moves.

Headline inflation rose in line with expectations on both an annual and monthly basis, while core inflation came in softer than forecast, suggesting price pressures, particularly those stemming from recently imposed tariffs, were limited for now.

Following the data, traders modestly increased their expectations for interest rate cuts, but markets are still pricing in two reductions in the federal funds rate by year-end, with the first cut probably happening in September.

Fed Chair Jerome Powell cautioned that inflation may rise this summer due to tariff effects, hinting that rate cuts could be delayed. Looking ahead, upcoming PPI and retail sales figures due later this week will offer additional insight into the health of the US economy. The greenback was mostly higher against the yen and the euro

Source: Trading Economi