• EUR/USD trades slightly higher on Tuesday ahead of US CPI data for February. 
• US inflation is set to shape expectations of the timing of Fed interest rate cuts – a US Dollar driver. 

EUR/USD edges higher, trading up about a tenth of a percent on Tuesday during the early European session just after the release of German inflation data, which came out unrevised from the preliminary estimates and in line with expectations..  

Traders, however, are mainly locked on to the next big data release for the pair, US Consumer Price Index (CPI) inflation data, which is scheduled for 12:30 GMT. 

The CPI report could be a key factor in determining when the US Federal Reserve (Fed) will start cutting interest rates. If inflation comes out lower than expected, it could bring forward the moment when the Fed pivots. 

This would be negative for the US Dollar as lower interest rates tend to attract less foreign capital inflows.