The U.S. dollar rose on Tuesday, benefiting from weakness on Wall Street, although gains are limited ahead of the release of key inflation-related data later in the session.

The dollar, a safe haven for investors

Diminished confidence in the technology sector on Wall Street has helped the U.S. currency to rise on Tuesday, although gains are minimal as market traders look ahead to PCE price index data due on Friday.

Politics was also in focus for investors, with the first U.S. presidential debate between President Joe Biden and his predecessor Donald Trump scheduled for Thursday.

Equally, it should not be forgotten that the most relevant data of the week will be core PCE inflation due on Friday.

Politics weighs on the euro and drags it down

EUR/USD was down 0.1% to 1.0728, with politics also weighing on the euro’s weakness.

Elections in France will start this weekend, and the political turmoil in France in the wake of President Emmanuel Macron’s unexpectedly early election call earlier this month has given room for a possible monthly loss of around 1% for the euro.

France’s National Rally has reported that the party will respect the nation’s budget rules, which has served to limit losses, although the plan to cut €7 billion in taxes appears to remain in place, financed in part by the cut in France’s contribution to the European Union budget.

GBP/USD rose 0.1% to 1.2696, with sterling holding steady as Bank of England policymakers will reserve their views until after the upcoming general election.

The yuan falls to a seven-month low against the dollar

On the Asian continent, USD/JPY fell about 0.1% to 159.47, as Japanese authorities continued their warnings that they would intervene in the market in case of excessive volatility on the Japanese currency side.

The minutes of the Bank of Japan’s June meeting likewise offered some support for the yen, as some officials were seen considering the option of a July rate hike.

USD/CNY rose 0.1% to 7.2628, and the yuan hit a seven-month low, following a weak midpoint fixing by the People’s Bank of China.

Fears of a trade war with the West largely worsened sentiment towards China, after Chinese authorities put this possibility on the table in the face of high European tariffs on electric vehicle imports.