The U.S. dollar stabilized Tuesday after strong Chinese economic data tempered global growth fears. China's retail sales (+4%) and industrial output (+5.9%) beat forecasts, aiding market sentiment despite persistent real estate concerns. U.S. tariff tensions lingered as President Trump maintained a hardline stance against Canada and Europe, escalating fears of broader trade disruptions.

Euro Slips Ahead of Key Events

EUR/USD edged down 0.2% as optimism faded regarding Germany’s proposed stimulus measures and uncertainty remained around Ukraine peace talks. Traders remained cautious ahead of key technical resistance near 1.0910, while option expiries between 1.0860 and 1.0900 restricted volatility.

Sterling Holds Near Recent Highs

GBP/USD traded within a tight range (1.2926-1.2944), showing resilience despite rising caution ahead of the upcoming U.K. budget update. Technical support at the 21-day moving average (1.2765) remains critical to sustaining recent bullish momentum.

Yen Firms Amid Persistent Risk Concerns

USD/JPY hovered just below 149, reflecting steady yen demand amid cautious risk appetite and lingering tariff worries. Strong support exists at 148.17, with key resistance near 149.20. Yen crosses, including EUR/JPY and AUD/JPY, maintained gains, benefiting from improved Chinese data and subdued volatility.

Commodities Mixed on Economic Optimism, Tariff Concerns

Gold rose (+1%) on inflation concerns stemming from trade uncertainties, while oil prices advanced slightly amid tightened supply expectations. Copper surged 2.9% on robust Chinese industrial activity, offsetting broader tariff concerns.

Market Outlook Cautious

Investor caution remains elevated ahead of critical U.S. retail sales data and potential geopolitical developments, including Trump-Putin talks, EU tariffs, and Germany’s fiscal package vote later this week.