U.S. dollar gains as Euro falls on European inflation data

The U.S. dollar has strengthened against major peers on Tuesday, while the euro fell following slower-than-expected inflation in Europe. Market movements were relatively subdued as investors focused on upcoming U.S. economic data.

The impact of the weekend’s U.S. capture of Venezuelan President Nicolas Maduro was short-lived, with currencies largely unaffected. Amo Sahota, director at Klarity FX, said there was no risk-off sentiment, noting the situation remained isolated.

The dollar rose 0.49% to 0.795 against the Swiss franc and 0.14% to 156.6 against the Japanese yen. Sahota highlighted that attention is on the U.S. labour market, with ADP and job openings reports due this week, followed by the main jobs report on Friday.

Markets are also digesting comments from Federal Reserve officials on interest rates. Richmond Fed President Tom Barkin said any rate changes must be “finely tuned” to incoming data, while Minneapolis Fed president Neel Kashkari warned of potential upward pressure on unemployment.

The euro weakened to $1.169 as inflation slowed more than expected in Germany and France, pushing European government bond yields down around three basis points. The pound also fell, last trading at $1.3504.

The U.S. dollar index rose 0.19% to 98.57. The Australian dollar hit a one-year high at $0.6739, while the offshore Chinese yuan remained stable at 6.981, and the New Zealand dollar eased 0.1% to $0.5782.

Investors remain focused on the outlook for U.S. monetary policy and future European inflation trends.

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