USD faces pressure as July CPI forecast at 0.1% amid US-China trade tensions

USD index has retreated 0.2% to 102.45 as markets anticipate Tuesday's US CPI report for July, with Deutsche Bank projecting a sharp deceleration to 0.1% month-over-month from June's 0.2%. The dollar's weakness stems from expectations of cooling inflation potentially supporting Federal Reserve rate cuts later this year. Adding to USD uncertainty, the August 12 deadline for US-China tariff pause extension looms large, with trade tensions potentially impacting risk sentiment and dollar demand as a safe haven. Core CPI remains the key focus for traders, expected to moderate to 0.2% from 0.3% previously. Technical indicators show USD index testing support at 102.30, with resistance at 103.00. A softer-than-expected CPI reading could accelerate dollar selling across major pairs, while any surprise uptick might provide temporary USD relief. The confluence of inflation data and trade policy decisions creates a pivotal week for dollar positioning.