The US dollar continued its weak run, dropping slightly lower on Tuesday. At the time of writing, DXY is trading at 96.69, over increased expectations of a rate cut by the Fed in the coming months.

Ever since the sharp decline in long-term US Treasury yields, markets have been expecting the Fed to cut interest rates, causing bearishness in the US dollar. In addition, weaker than expected NFP data further increased this sentiment last week.

For now, markets continue to look at the ongoing trade war between US and China for clues on how to trade the US dollar. Prospects also remain high that US President Trump could announce tariffs on trade with Japan and Europe in the coming months, causing more downward pressure in the dollar.

US PPI rose for a second consecutive month, as data released on Tuesday showed. On Wednesday, the focus will shift to US CPI figures. This is a key indicator of inflation which is watched closely by the Fed for clues on the health of the US economy.