Dollar Steadies Ahead of Key Inflation Data; Yen Gives Up Gains

The US dollar traded flat on Tuesday ahead of the latest consumer price index (CPI) report, while the Japanese yen gave back some of its recent gains following suspected intervention by Tokyo.

Market participants are positioning themselves for the CPI release, which is expected to provide fresh clues on the Federal Reserve's interest rate path. A hot inflation reading could reinforce expectations of prolonged higher rates and a stronger dollar, while a cooler print might revive bets on policy easing later this year.

The yen's retreat suggests that any intervention effect may be short-lived, with traders focusing on the interest rate differential between Japan and the US.