The US Dollar enters the new week under renewed pressure as investors reassess expectations for Federal Reserve policy. Recent US economic data, including softer inflation and weaker retail sales, has reduced expectations for another rate hike in September. The Dollar Index has consequently struggled to maintain its recent strength.

July US CPI rose 3.4% year-on-year, while core CPI increased 2.5%, broadly supporting the view that inflationary pressures are gradually moderating. Producer prices also came in flat for July, below market expectations, adding to the argument that the Fed may have less urgency to tighten monetary policy further.

Markets are now turning their attention to the upcoming release of the Federal Reserve's July meeting minutes. Traders will look for clues about internal disagreements among policymakers and whether further rate increases remain on the table.

For forex traders, the combination of changing Fed expectations, Treasury yields and geopolitical risks could keep USD pairs volatile. EUR/USD and other major currency pairs may see stronger directional moves as investors continue adjusting their positions ahead of the next major US economic releases.