Dollar Holds Ground Above 100 Amid CPI Relief and Geopolitical Tensions

The US dollar has steadied above 100 after the Consumer Price Index came in line with forecasts, lifting the Dollar Index back above 100.00 and firming against most major peers ahead of a data-heavy Thursday.

Ahead of key releases, including the UK's preliminary second-quarter GDP figures, EUR/USD retreated towards the low 1.1500s as earlier gains reversed, while GBP/USD eased into the high 1.3400s.

The USD/JPY continued rebounding, moving back towards 159.50. Gold rose to around $4,410 per troy ounce as Middle East tensions increased, with WTI crude holding near $83.00 a barrel due to the closure of the Strait of Hormuz and sustained geopolitical risk premium.

With the US Producer Price Index expected to show core inflation slowing sharply to 4.2% from 4.7%, any downward surprise could quickly erase the greenback's recent gains, according to VT Markets. Historically, similar sharp drops in wholesale inflation have triggered immediate downward pressure on treasury yields.