The dollar fell across the board on Tuesday after data showed that U.S. consumer prices increased moderately in July, leaving intact the case for a Federal Reserve interest-rate cut next month.

The consumer price index rose 0.2% last month after gaining 0.3% in June, the Labor Department's Bureau of Labor Statistics said on Tuesday.

In the 12 months through July, the CPI advanced 2.7% after rising 2.7% in June. Economists polled by Reuters had forecast the CPI rising 0.2% and increasing 2.8% year-on-year.

"Underlying inflation remains subdued, giving policymakers room for maneuver as they respond to signs of incipient weakness in labor markets," Karl Schamotta, chief market strategist at Corpay, said.

"Chair Powell should put a September cut on the table when he speaks at Jackson Hole on the 21st," Schamotta said, referring to the Fed's Jackson Hole Economic Symposium later this month.

Currency markets had been in a holding pattern earlier as expectation grew that a moderate reading on U.S. price pressures could cement bets for a Fed rate reduction next month, which increased after last week's soft payrolls data.

"If the Fed moves ahead with back-to-back cuts, the policy rate differential with peers could narrow quickly, weighing on USD against higher-yielding currencies," Fawad Razaqzada, analyst at Forex.com, said in a note.

The euro erased earlier losses against the buck to trade up 0.4% at $1.16663. The greenback fell 0.3% against the Japanese yen to trade at 147.74 yen.

Source: Investing.com