The US dollar made gains across major global currencies early Tuesday, as positive momentum from ongoing trade negotiations between the United States and China buoyed market confidence during a relatively quiet data calendar.
The National Federation for Independent Business (NFIB) disclosed on Tuesday that small business optimism inched up slightly, although economic uncertainty continues to loom large. Notably, taxes overtook labour quality and inflation as the primary concern for 18% of respondents—marking the first time since December 2020 that taxes ranked highest.
Meanwhile, the Federal Reserve entered its pre-meeting blackout period ahead of its June 17–18 Federal Open Market Committee (FOMC) gathering. Currency traders noted an uptick in the greenback’s value as dialogue between Washington and Beijing extended into a second day. Optimism surrounding potential easing of US semiconductor export restrictions toward China lifted investor sentiment, particularly within the tech sector, with US chipmakers witnessing notable gains.
Despite this tailwind, analysts at IG cautioned that the dollar’s momentum could be capped due to persistent investor concerns over unpredictable US trade strategies and underlying fiscal vulnerabilities. The US Dollar Index (DXY) edged higher by 0.2% to settle at 99.1399, while the euro dipped 0.2% to $1.1401.
By early Tuesday, EUR/USD hovered at 1.1424, marginally below Monday’s closing level of 1.1425 but above the 1.1420 mark seen in the previous morning’s trade.
In the Eurozone, investor sentiment recorded an uptick in June, suggesting a cautiously optimistic economic outlook. European Central Bank (ECB) President Christine Lagarde is slated to speak ahead of the next ECB policy meeting scheduled for July 24.
Sterling faced pressure, with GBP/USD falling to 1.3501 from Monday’s 1.3559 close. The pound’s decline followed fresh data showing a slowdown in UK wage growth and rising unemployment for April. The Bank of England will convene on June 19.
In Asia, the Japanese yen depreciated as USD/JPY climbed to 144.5864, up from 144.5770 in the prior session. The move coincided with data showing slower growth in machine tool orders and an uptick in the money stock. The Bank of Japan will hold its next policy meeting on June 16–17.
The Canadian dollar also weakened slightly. USD/CAD was trading at 1.3698, compared to Monday’s close of 1.3685. With no key Canadian economic data expected Tuesday, attention shifts to the next Bank of Canada meeting on July 30.
