The US dollar rose in early European trading on Tuesday, recovering from a one-month low before Federal Reserve Chairman Jerome Powell’s testimony before the Senate, while the euro held its ground amid a volatile French political climate.
The dollar rose slightly on Tuesday, but it remains in a weak position after last Friday’s jobs report and ahead of Federal Reserve Chairman Jerome Powell’s two-day testimony before Congress, starting later on Tuesday with the Senate and followed by the House testimony on Wednesday. More evidence on the potential path for US interest rates is expected this week, with the key consumer inflation data due on Thursday.
On another note, the EUR/USD pair fell slightly as traders are still trying to absorb the implications of the second round of parliamentary elections held on Sunday in France, where the country now faces a hung parliament and difficult negotiations to form the government.
Standard & Poor’s Global said on Monday that the hung parliament in France is likely to complicate the policymaking process, warning that more debt or a continued slowdown in economic growth could lead to another credit rating downgrade.
The GBP/USD pair traded largely unchanged, and Bank of England policymaker Jonathan Haskel said he wants to keep interest rates unchanged amid continued inflationary pressures in the labor market. The Bank of England is scheduled to hold its next meeting at the beginning of August.
In Asia, the USD/JPY pair rose, with the yen remaining under pressure as a series of weak Japanese economic readings reinforced bets that the Bank of Japan will have limited room to raise interest rates further.
The USD/CNY pair rose by 0.1% to 7.2722, with the yuan hovering around its seven-month lows, hurt by growing concerns about a trade war with the West.
