Last month's report showed consumer prices increased by the most in nearly 12 years in April. However, more gains are expected as the market forecast a 4.7% year-on-year inflation growth in May, up from 4.2% in April.
The core inflation is seen rising to 3.4% on the year, the highest in decades. Additionally, many economists think inflation numbers will be even higher than the official estimates.
Still, the Fed keeps saying inflation is only transitory and won't last long. The market does not think so.
Today's other major event is the latest policy decision by the European Central Bank, with investors carefully watching for any clues of an imminent slowdown to its bond-buying program, also known as tapering.
The greenback was somewhat higher during the London session, but sentiment seems negative heading into the mentioned data.
Precious metals fell, ending their post-NFP rally, and gold was seen half a percent lower today, trading at around 1,880 USD.