US Dollar Index Tumbles to Two-Week Low Ahead of Inflation Data

The US Dollar Index (DXY) is struggling to stay above 99.00, dropping to an over two-week low during the Asian session on Tuesday.

Traders are eyeing this week's key US inflation data, with the US Producer Price Index (PPI) and Consumer Price Index (CPI) set for release on Thursday and Friday respectively.

The DXY has been in a downtrend since last Wednesday's nearly three-week high, pressured by a surging Japanese Yen (JPY).

Analysts at OCBC note that the recent US Nonfarm Payrolls report increased the chances of a Fed rate hike at the September 15-16 meeting amid inflation risks stemming from elevated energy prices.

Rising Fed hike bets and escalating US-Iran tensions could lend support to the safe-haven Greenback, but USD bulls are trimming long positions ahead of the key data release.