Dollar Slips as Investors Brace for Inflation Data; Euro Gains After Lagarde Warning

The U.S. dollar weakened on Tuesday as traders waited for key inflation figures that could shape the Federal Reserve's next move on interest rates. The euro edged higher after European Central Bank President Christine Lagarde warned that inflation in the eurozone remains a threat. Her comments suggested the ECB may keep rates high for longer than markets expect. Investors are focused on the upcoming U.S. consumer price report. The data will help determine whether the Fed cuts rates soon or holds them steady. A weaker dollar makes U.S. exports cheaper abroad but raises costs for Americans buying foreign goods. Currency markets remain volatile as central banks on both sides of the Atlantic weigh their next steps.