Dollar sees an uptick ahead of key inflation reading later this week

The US Dollar picked up on Tuesday as a result of weakness on Wall Street, despite gains being tempered as anticipation builds ahead of US inflation data set to be released on Friday.

Diminished confidence in the tech sector on Wall Street boosted the U.S. currency on Tuesday. However, gains remained limited as traders awaited Friday's PCE price index data.

Officials from the Fed have already talked up the need for more data pointing towards a slowdown in inflation before agreeing to cut interest rates. The U.S. central bank's preferred inflation gauge is anticipated to play a crucial role in shaping the outlook for future interest rate decisions.

Political events are also taking center stage in investors' minds, with the first U.S. presidential debate between President Joe Biden and his predecessor Donald Trump set for for Thursday. However, the primary market mover this week will be Friday's core PCE inflation reading.

Political factors have also been weighing down on the Euro. The upcoming French elections this weekend, coupled with political turmoil following President Emmanuel Macron's unexpected decision to call for snap elections earlier this month, have contributed to an estimated monthly loss of approximately 1% for the single currency.

France's National Rally has indicated that the party will uphold the nation's budgetary regulations, which has helped to mitigate losses. However, the proposal to cut 7 billion in taxes still appears to be on the table, with funding potentially derived from reducing France's contribution to the EU budget.

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