Investing.com - The U.S. dollar rose Tuesday in the wake of strong U.S. services data, but gains are limited amid uncertainty on the tariff front.
At 05:15 ET (09:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher to 104.000, hovering near a three-week top.
Dollar helped by economic data strength
The dollar received a boost from the release of a strong services component in S&P Global’s flash U.S. PMI figures, especially when contrasted with weakness in Europe and Japan.
Worries that U.S. President Donald Trump’s trade policies could hit economic activity in the world’s largest economy, as well as trigger fresh inflationary pressures, have weighed on the greenback for most of this year.
“However, the surveys highlighted a growing gap between the contracting manufacturing sector and the rebounding services sector in the U.S.,” said analysts at ING, in a note.
“Markets are keenly watching for clearer signals on where to place activity-related USD bets. The Conference Board Consumer Confidence surveys published today are the biggest release for the week in FX. A great deal of the market’s pessimism on US macro has stemmed from soft consumer figures,” ING added.
The dollar has also been helped by comments from President Trump saying on Monday that not all of his threatened levies would be imposed on April 2 and some countries may get breaks.
Ukraine peace talks in focus
In Europe, EUR/USD traded 0.2% lower to 1.0786, with the single currency dropping to its lowest level since early March as a powerful rally loses steam.
The March German Ifo consumer sentiment survey improved slightly from the previous month, but the gains have been less than expected, following on from Monday’s disappointing PMI data.
A lot of Tuesday’s focus, however, will be on the Russia-Ukraine peace process, with Ukrainian and U.S. delegations scheduled to meet in Saudi Arabia following Russia-U.S. talks a day earlier.
“ Indications that some agreement is building around a full ceasefire would support European sentiment and the euro,” added ING.
GBP/USD fell 0.1% to 1.2913, hitting a two-week low during trading earlier in the session.
U.K. Chancellor Rachel Reeves is set to deliver her spring statement on Wednesday, and is expected to announce a sharp downgrade to the country’s economic growth this year.
Yen slips to three-week low
In Asia, USD/JPY slipped marginally lower to 150.62, after having climbed to a three-week high of 150.92 earlier in the session in the wake of the disappointing Japanese factory activity.
USD/CNY edged 0.1% higher to 7.2630.
With the strengthening dollar, and potential risks from upcoming U.S. trade tariffs, Asian currencies remained subdued.