Euro holds above 3-week lows ahead of US inflation data

Euro rose in European trade against dollar away from three-week lows, on track for the first profit in three days and ahead of crucial US inflation data, which would provide clues for the future of US monetary policies.

EUR/USD rose 0.2% to 1.1830, with an intraday low at 1.1804, after shedding 0.1% yesterday, the second loss in a row, plumbing three-week lows at 1.1770.

The dollar index fell over 0.1% on Tuesday away from three-week highs at 92.88 against a basket of major rivals. 

Dollar lost ground on profit-taking while investors shun new positions until inflation data for August is revealed. 

As inflationary pressures mount on policymakers, bets for a policy tightening by the Federal Reserve before yearend mounts in a step that will lead to interest rate hikes later on.