Currency markets look towards Fed comments

The Dollar rose slightly on Tuesday as currency markets anticipated a crucial U.S. retail sales report and awaited comments from Federal Reserve officials to gain insight into the timing and pace of potential interest rate cuts.

The Dollar has experienced fluctuations as moderate U.S. inflation readings clashed with the overall hawkish tone of Fed officials at last week's policy meeting. During the meeting, they reduced their previous median projection of three quarter-point rate cuts this year to just one.

Instead, the rally in the dollar index has been largely driven by a sharp selloff in the euro. This occurred after French President Emmanuel Macron called a surprise snap election last week following his ruling centrist party's significant defeat by Marine Le Pen's eurosceptic National Rally in the European Parliament elections.

Philadelphia Fed President Patrick Harker revealed on Monday that he is in the single-cut camp, but left the door open to changing his view depending on incoming data.

A number of Fed officials are scheduled to speak at various venues later in the day, including Susan Collins from the Boston Fed and Thomas Barkin from the Richmond Fed.

The euro slipped 0.14% to $1.0718, trimming some of the previous session's 0.26% gain. Meanwhile, sterling dipped 0.16% to $1.2683.

The euro has somewhat stabilized this week after Le Pen indicated she would not pursue extreme fiscal policies if she came to power and clarified that she is not advocating for Macron's removal.

The Australian dollar remained steady at $0.6614, unaffected by the Reserve Bank of Australia's decision to hold rates steady as expected on Tuesday.

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