The U.S. Bureau of Labor Statistics (BLS) is set to release the Consumer Price Index (CPI) data for July on Wednesday. This is a key indicator that significantly impacts the Federal Reserve's monetary policy decisions and could lead to sharp fluctuations in the U.S. dollar.

U.S. inflation, as measured by the CPI, is expected to increase to 2.9% year-on-year in July, slightly down from 3% in June. Meanwhile, core inflation, which excludes the volatile food and energy prices, is expected to decrease to 3.2% from 3.3%.

According to the CME FedWatch Tool, the market currently anticipates nearly a 50% probability of a 50 basis points rate cut in September, due to the rapid slowdown in employment growth.

Source: Fxstreet