Dollar and Euro Hold Steady Ahead of Inflation Data

The US dollar and euro traded in narrow ranges on Tuesday as currency markets waited for key inflation data. The market is bracing for the US Consumer Price Index (CPI) release, which will provide fresh clues on the Federal Reserve's interest rate path.

Traders are cautious ahead of the CPI report, with the dollar index remaining close to 104.5 and the euro hovering near $1.08. Analysts expect a modest cooling in price pressures, but core inflation is likely to remain sticky.

The upcoming CPI report will also be influenced by geopolitical risks stemming from recent incidents in the Strait of Hormuz, a critical chokepoint for global oil shipments. However, currency markets have so far remained insulated from these risks.