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Growing recession fears, fueled by softer labor market data and trade policy uncertainties, have increased bets on rate cuts. Markets are anticipating a rate cut in June, but still see a 40% chance of an earlier move in May, adding pressure on the greenback. However, if today's core and headline numbers show resilient inflation, traders may delay expectations for rate cuts, providing a temporary boost for the US currency.

Meanwhile, US treasury yields declined, with the 10-year note moving within a narrow range above 4.2%. A stronger-than-expected CPI data is likely to support yields, reinforcing expectations of a more hawkish Fed stance. Conversely, softer inflation numbers are expected to exert pressure on yields.

On the geopolitical front, progress on a potential ceasefire between Ukraine and Russia, following yesterday's meeting between US and Ukrainian officials, could bolster risk appetite. As a result, the demand for safe-haven currencies might decline, adding to the dollar's recent weakness.

(An analysis by Joseph Dahrieh, Managing Principal at Tickmill)