FOREX-Dollar steady as traders await key US inflation data

The U.S. dollar was steady on Tuesday ahead of Wednesday's highly anticipated consumer inflation report for July, which could shape near-term expectations for Federal Reserve policy.

Traders trimmed bets on a September Fed rate hike after Friday's U.S. jobs report showed employers unexpectedly cut payrolls last month.

A resurgence in inflation could revive those bets as the central bank continues to battle price pressures that are keeping inflation stubbornly above its 2% annual target. Conversely, further signs of disinflation could dampen tightening expectations.

“So long as this disinflationary trend continues, it's hard to make a case for rates to be going higher,” said Eric Theoret, currency strategist at Scotiabank.

Rising oil prices, driven by an elusive deal to reopen the Strait of Hormuz, have reignited concerns over renewed inflationary pressure, though energy prices remain well below their recent highs.