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The dollar was in limbo on Tuesday as investors waited to see how U.S. economic data affected the chance of outsized rate cuts, while a rally in Japanese stocks helped staunch the bleeding in yen carry trades.

The greenback was idling at 147.17 yen, having briefly touched a one-week high of 148.23 overnight before profit-taking emerged.

The euro stood at $1.0931, after creeping higher overnight and nearer to resistance at $1.0944 and $1.0963. The dollar index was flat at 103.08.

Producer price figures due later will provide an appetizer for the main inflation report on Wednesday, and could move markets since they feed through to the core personal consumption (PCE) measure favoured by the Federal Reserve.

Forecasts are for a 0.2% rise in both the headline PPI and the core measure.

More important will be the consumer price report and retail sales for July which could have a material impact on whether the Fed eases by 25 basis points or 50 basis points in September.

Currently futures are evenly split on the larger move, having briefly priced it as a dead certainty last week when stock markets were in free fall.

"A hot CPI and hot sales would be the most volatile scenario, and see the bond market quickly repricing back to a 25bp cut," wrote analysts at JPMorgan in a note.

"A cool CPI and cool sales could ease some concerns about the stagflation risks, but bring renewed recession concerns to the market," they added. "We may see the bond market quickly react to this print pricing in 50bps or more of Sept cuts."

The former outcome would likely lift Treasury yields and support the dollar, while the latter would have the opposite effect. Recession talk, in particular, has tended to boost the yen and Swiss franc as safe havens.

The futures market clearly still sees recession as a risk with 101 basis points of Fed easing priced in by Christmas, and more than 120 basis points for next year.

That seems to sit at odds with much of the economic data which has the influential Atlanta Fed GDPNow estimate of growth running at an annual 2.9%.

"The July CPI annual rates are expected at 3.0% y/y and 3.2% y/y for the core," noted analysts at ANZ. "Although the trend is moderating, inflation is too high for the Fed to justify the market pricing 100bp of rate cuts between September and year-end."

"A material deterioration in the data or intensified disinflation process would be required to deliver that."