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The U.S. dollar remained relatively steady near a three-week high on Tuesday, supported by expectations of a more cautious monetary policy.
Traders could continue to see the Federal Reserve delay rate cuts, as price pressures linked to trade tariffs persist.
Fed Chair Jerome Powell recently stated that inflation is likely to rise over the summer, reinforcing the case for holding rates steady in the near term.
Headline CPI is expected to reach 2.7% year-over-year, with core inflation seen climbing to 3.0%. Any deviation from expectations could shift market pricing around the timing of rate cuts.
Yields were mixed, with the 10-year Treasury sliding toward 4.41%, while shorter-term rates edged slightly higher.
Markets are currently pricing in two cuts by year-end. A softer-than-expected inflation reading could revive dovish bets, pressuring both yields and the dollar. However, fiscal concerns could leave long-term yields supported.
Political risk also lingered, as President Trump renewed criticism of Powell, reiterating that rates should fall below 1%. Reports of possible leadership changes at the Fed have added a layer of uncertainty to the monetary policy outlook and could weigh on the currency.
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