Investing.com – The U.S. dollar rose in early European trade on Tuesday, recovering from sharp losses overnight, while the euro fell following weak German jobs data.
At 04:45 ET (0845 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, rose 0.1% to 104.165 after previously falling below 104 for the first time since April 9.
JOLTs data in focus
The dollar steadied on Tuesday after sharp losses earlier in the week after data showed a second straight month of slowing manufacturing activity and an unexpected decline in construction spending.
Signs of economic weakness have raised the possibility that the Federal Reserve will cut interest rates later this year, with fed funds futures now pricing the odds of a September rate cut at about 59%, according to LSEG data, up from about 55% on Friday.
More important work is expected later in the session in the form of the April report, a precursor to the key US monthly report on Friday.
“The dollar is starting to show signs of weakness,” ING analysts said. “Today’s JOLTS US jobs data could determine whether the dollar’s recent losses are simply idle range trading or the start of an important new trend. We definitely see downside risks for the dollar today.”
Euro falls after weak German employment data
In Europe, trade traded 0.1% lower at 1.0888, retreating after the pair rose to 1.0916 early in the session for the first time since March 21.
The number of people rose more than expected in May, data showed earlier on Tuesday, rising by a seasonally adjusted 25,000, more than the 10,000 expected.
“The spring recovery has not really begun this year,” said labor bureau chief Andrea Nales. “Improvement will take a long time to come.”
The bank signaled a rate cut at its next meeting on Thursday, but rising inflation in last week’s data could leave officials wondering when interest rates could be cut soon.
fell 0.2% to 1.2776, falling from an earlier rise to its highest level since March 14.
With a potentially crucial policy meeting later this month, traders are awaiting clues about when the rate-cut cycle will begin.
Japanese yen sees demand
In Asia, trade was 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.
The meeting is due later this month and traders will be looking for clues as to whether another rally is possible.
traded 0.1% higher at 7.2439, remaining near recent six-month highs as sentiment towards China remained weak.
rose 0.5% to 83.494, with the Indian rupee lower after early signs suggested a narrow victory for Prime Minister Narendra Modi in the closely watched 2024 general election.
While the victory still represents a rare third term for Modi, the smaller majority than he had hoped suggests greater difficulty in initiating economic reforms.