The U.S. dollar edged higher on Tuesday but remained close to its six-week low as growing uncertainty over trade policies clouded the outlook for the U.S. economy. Meanwhile, the euro weakened slightly ahead of key inflation data from the eurozone.

As of 04:10 ET (08:10 GMT), the U.S. Dollar Index—which measures the greenback against a basket of six major currencies—rose 0.2% to 98.855. This came after the index fell to its lowest level since late April at the beginning of the week.

Trade Tensions Undermine Economic Confidence

Trade concerns continue to weigh on investor sentiment. According to Reuters, the Trump administration is pressing negotiating partners to submit their most favorable trade proposals by Wednesday. However, the looming doubling of tariffs on imported steel and aluminum to 50%—also set for Wednesday—signals that economic headwinds could intensify.

“Yesterday’s ISM manufacturing survey surprised to the downside, reversing the recent pattern of resilient U.S. data,” analysts at ING noted. “The export component’s drop to a five-year low may point to the impact of retaliatory tariffs, further burdening a manufacturing sector already strained by trade uncertainty and weaker consumer spending.”

Later in the session, the release of April’s JOLTS report will draw attention, especially data on job openings and layoffs. Meanwhile, April’s durable goods orders are also expected to show weakness. “Another round of soft data, particularly in the labor market, could push the dollar back toward its April lows,” ING added.

Euro Slips, Pound Gains on Robust UK Data

EUR/USD slipped 0.2% to 1.1415, retreating from a six-week high ahead of the flash inflation report for May. Analysts expect eurozone consumer prices to have slowed to an annual rate of 2.0%, down from April’s unexpectedly high 2.2%, which could support a 25 basis-point interest rate cut by the European Central Bank (ECB) on Thursday.

“Today’s CPI release is unlikely to alter expectations of a cut, but it may fuel speculation that President Lagarde will strike a more dovish tone,” said ING.

GBP/USD also dipped 0.2% to 1.3518 but remained supported by strong domestic data and cautious policy moves from the Bank of England. UK house prices rose 3.5% year-on-year in May, according to Nationwide, beating expectations. Monthly prices increased 0.5%, rebounding from April’s decline and marking the biggest gain since December.

Aussie Falls After Dovish RBA Minutes

In Asia, AUD/USD dropped 0.6% to 0.6460 after the Reserve Bank of Australia’s May meeting minutes reaffirmed its dovish stance. The central bank had already cut interest rates by 25 basis points in May, citing increasing risks from trade tariffs.

Market sentiment was further dampened by a weak batch of Q1 economic data, including a larger-than-expected current account deficit. Attention now turns to Australia’s Q1 GDP data, due Wednesday.

Yen Retreats Slightly, Yuan Weakens Post-Holiday

USD/JPY rose 0.1% to 142.88, with the yen giving back some of its recent safe-haven gains. Meanwhile, USD/CNY slipped 0.1% to 7.1906 as Chinese markets reopened after a long weekend.

Recent PMI data pointed to ongoing weakness in China’s economy. The Caixin manufacturing PMI unexpectedly contracted in May, aligning with the government’s PMI figures released over the weekend. Export orders continue to stall, pressured by elevated U.S. tariffs.