Investing.com – The US dollar rose in early European trading on Tuesday, recovering after steep losses overnight, while the euro fell after weak German employment data.
At 04:45 ET (08:45 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, rose 0.1% to 104.165, having previously fallen below 104 for the first time since April 9 had dropped.
JOLTs data in the spotlight
The dollar stabilized on Tuesday after sharp losses at the start of the week, as data showed a second straight month of slowdown in industrial activity and an unexpected drop in construction spending.
Signs of economic weakness raised the possibility that the Federal Reserve would cut rates later this year, with Fed Funds futures now putting the chances of a September rate cut at about 59%, according to LSEG data, up from about 55% on Friday .
More important work awaits later in the session, in the form of April, a closely watched precursor to Friday’s main monthly magazine US.
“The dollar is starting to show signs of weakness,” ING analysts said in a note. “Today’s US JOLTS jobs data could reveal whether the recent dollar losses are just a futile trade or the start of a major new trend. We certainly see downside risks for the dollar today.”
The euro falls after weak German employment data
In Europe, it traded 0.1% lower at 1.0888, retreating after the pair climbed to 1.0916 for the first time since March 21 earlier in the session.
The number of people rose more than expected in May, data showed earlier Tuesday, growing by 25,000 in seasonally adjusted terms, above the expected 10,000.
“The spring recovery did not really get going this year,” said Andrea Nahles, head of the labor department. “Improvement will take a long time.”
The ECB has announced a rate cut at its next meeting on Thursday, but a rise in inflation in last week’s data could prompt officials to consider the next step in easing rates.
fell 0.2% to 1.2776, down after an earlier climb to the highest level since March 14.
The ECB will hold a potentially crucial policy meeting later this month, and traders are watching for clues as to when the rate-cutting cycle will begin.
The Japanese yen sees demand
In Asia, it traded 0.5% lower at 155.34, with the yen continuing to rise against the dollar after falling below 156 overnight for the first time since May 21.
These will meet later this month and traders will be looking for clues as to whether another rise is planned.
traded 0.1% higher at 7.2439, holding near recent six-month highs as sentiment towards China remained weak.
rose 0.5% to 83.494, with the Indian rupee retreating after early indications pointed to a narrow victory for Prime Minister Narendra Modi in the closely watched 2024 general election.
While a victory would still mean a rare third term for Modi, a smaller majority than he had hoped suggests economic reforms will be more difficult to implement.
