Mounting tariff tensions between Washington and Brussels weighed on the euro as markets priced in heightened European Central Bank easing prospects. The US administration's threat to impose 30% tariffs on EU imports starting August 2025 could further undermine the fragile Eurozone economy. EU Trade Commissioner Maroš Šefčovič warned such levies would effectively halt transatlantic commerce, stating: "Trade at 30% or higher tariffs becomes impossible - this would severely damage both economies. I'll spare no effort to prevent this scenario."

Simultaneously, sterling tumbled to three-week lows after Bank of England Governor Andrew Bailey signaled potential accelerated rate cuts. His dovish remarks about responding to faster-than-expected labor market deterioration prompted traders to price in 58 basis points of easing by year-end - up from 51 basis points last Friday. Money markets now assign 80% probability to a 25-basis-point cut at the next meeting. This policy divergence from the Federal Reserve, which isn't expected to cut before September, continues to pressure the British currency.

Key data releases scheduled for Tuesday include: • China Q2 GDP (YoY) • Germany July ZEW Economic Sentiment Index • US June CPI (YoY, unadjusted) • US July Empire State Manufacturing Index • Canada June CPI (YoY, unadjusted) • Canada May Manufacturing Sales (MoM)

USD INDEX: The dollar index edged higher to 98.10 amid sustained Fed rate-cut repricing and safe-haven flows triggered by tariff tensions. Upbeat comments from Federal Reserve officials provided additional support. Resistance emerges near 98.50 with support at 97.50.

EUR/USD: The pair declined to 1.1670 as dollar strength converged with heightened ECB easing expectations fueled by US tariff threats. Technical resistance looms at 1.1750 while 1.1550 offers support.

GBP/USD: Sterling plunged to 1.3440, its weakest in three weeks, pressured by dollar strength and BoE dovishness. Last week's disappointing UK GDP data continued to drag, compounded by Bailey's comments. The pair faces resistance at 1.3550 with support near 1.3350.