Major currency pairs remained within familiar trading ranges early Tuesday as investors avoided taking large positions while closely monitoring developments surrounding the Middle East crisis.
Market attention remained focused on geopolitical headlines, with ongoing military activity between the United States and Iran continuing to influence sentiment.
Investors were also assessing the potential economic and market impact of renewed tensions in the region.
Oil prices moved lower early Tuesday after a volatile session on Monday.
West Texas Intermediate crude fell about 0.5% on the day and traded near $82 per barrel.
Dollar holds gains as markets await further signals
The US Dollar Index began the week on a stronger footing, gaining more than 0.2% on Monday.
During the European morning session on Tuesday, the index moved sideways and traded slightly below 101.00.
The dollar’s performance came as investors continued to monitor geopolitical developments alongside economic data from major economies.
In the UK, data from the Office for National Statistics showed that the ILO Unemployment Rate remained unchanged at 4.9%.
Average Earnings Excluding Bonus increased by 3.4% year-on-year during the period.
The figure was below the market expectation of 4.5%.
GBP/USD held on to small gains around 1.3450 after declining for three consecutive days.
Investors will turn their attention to the ONS again on Wednesday, when June inflation data is scheduled for release.
New Zealand dollar gains after higher inflation data
The New Zealand dollar strengthened after Statistics New Zealand reported a stronger-than-expected increase in consumer inflation.
The Consumer Price Index rose 4.1% year-on-year in the second quarter.
The figure accelerated from a 3.1% increase in the first quarter and exceeded the market expectation of 4%.
Following the release, NZD/USD gathered bullish momentum.
The currency pair traded above 0.5850, reaching its highest level since early June.
Euro and Canadian dollar remain under pressure
EUR/USD moved sideways around 1.1420 after recording marginal losses on Monday.
USD/CAD remained in a consolidation phase above 1.4050 after closing higher in the previous session.
Statistics Canada reported that annual CPI inflation eased to 2.8% in June from 3.2% in May.
Yen trades steady as Japan focuses on Fiscal sustainability
USD/JPY held steady near 162.50 during the European morning session on Tuesday.
Japan’s Prime Minister Sanae Takaichi said earlier in the day that the government would guide economic and fiscal policy while paying close attention to fiscal sustainability.
The prime minister also said the government would focus on maintaining market trust.
With no major US economic releases scheduled for the second half of Tuesday, investors are likely to remain focused on geopolitical headlines and developments in the Middle East.
Oil price movements and shifting expectations around energy supply risks could also influence currency markets as traders assess the potential for further escalation.
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