The euro and the dollar steadied on Tuesday as investors awaited a fresh catalyst after the previous day’s gains as signs of strength in the U.S. economy shifted focus away from trade concerns.
EUR/USD was steady at 1.1697 by 03:35 AM ET (07:35 AM GMT), after rising as high as 1.1743 on Monday, the most since May 24.
The euro has rebounded since hitting a ten-month low of 1.1509 a week ago as concerns over the political situation in Italy subsided after anti-establishment parties formed a coalition government, easing fears that repeat elections could give a mandate for the country to exit the euro zone.
The euro was steady against the yen, with EUR/JPY last at 128.43, having rebounded from an 11-month low of 124.61 reached a week ago.
The dollar was little changed against the Japanese currency, with USD/JPY at 109.80, extending its recovery from a five week low of 108.10 set last Tuesday.
Demand for the dollar continued to be underpinned after strong U.S. employment data on Friday cemented expectations for a June rate hike by the Federal Reserve and revived expectations for a fourth rate hike this year.
The Fed is widely expected to raise interest rates at its upcoming meeting next week, following on from its last rate hike in March.
Trade tensions remained in focus after finance ministers from the world’s leading economies criticized the Trump administrations new tariffs on steel and aluminum imports at a G7 meeting in Canada over the weekend.
Meanwhile, weekend talks between the U.S. and China on trade ended without a breakthrough, raising the danger that negotiations could collapse.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was steady at 94.06.
The pound was little changed against the dollar, with GBP/USD last at 1.3311.
Meanwhile, the Australian dollar edged lower after the country’s central bank left rates on hold overnight, in a widely expected decision.
AUD/USD edged down to 0.7642 after rising around 1% on Monday, while the New Zealand dollar was a touch higher, with NZD/USD up 0.16% to 0.7037.
