Dollar's Fragility Amid Trade Deal Uncertainty and Rising Asian Currencies

The U.S. dollar faced struggles on Tuesday, marked by impatient investors awaiting progress on expected U.S. trade deals. Asian currencies took a breather after an unprecedented two-day rise, emphasizing the dollar's fragility. The yen saw the dollar drop 0.57% to 142.87, while the British pound gained 0.56% to $1.3371.

Jane Foley, head of FX strategy at Rabobank, noted a decline in last week's optimism linked to potential trade deals. Market participants are growing concerned about company warnings regarding economic damage from tariffs. Recent investor optimism about potential U.S. deals slashing tariff levels had previously buoyed shares and the U.S. dollar.

In Europe, the euro inched up 0.14% to $1.1331 but faced limitations due to German political uncertainties, as conservative leader Friedrich Merz didn't secure enough parliamentary votes for the chancellorship. Despite setbacks, the euro remained at a one-month low against the pound and a two-week low against the yen, while traders processed moves in emerging Asian currencies.

(With inputs from agencies.)