The dollar fell for a third straight session on Tuesday, pressured by declining Treasury yields and ongoing tariff uncertainties ahead of Wednesday's key Federal Reserve meeting. Treasury yields declined by 2-5 basis points following strong demand in a 10-year auction and data showing a record-high U.S. trade deficit in March, attributed to tariff-driven import stockpiling. Treasury Secretary Scott Bessent warned the U.S. borrowing capacity was nearing critical limits, though he hinted at potential new trade deals soon.

Political Developments Fuel Market Caution

Global sentiment remained cautious after Canadian Prime Minister Mark Carney indicated revisions were necessary for the USMCA trade deal, firmly asserting "Canada would never be for sale," prompting diplomatic responses from President Trump. Meanwhile, Friedrich Merz became Germany's chancellor after a second-round victory, signaling possible shifts in European economic policy.

EUR/USD Gains; SNB Signals Intervention

EUR/USD advanced moderately, benefiting from dollar weakness and holding above critical support (1.1241), but remained unable to break last week's high (1.1425). Swiss franc weakness against the euro followed comments from Swiss National Bank Chair Martin Schlegel indicating potential currency intervention and deeper negative rates.

GBP/USD Rebounds on Trade Optimism

Sterling rose around 0.6%, finding support near its 21-day moving average at 1.3231, bolstered by optimism over a potential U.K.-India trade pact. Traders remain cautious ahead of Thursday's Bank of England meeting, expected to deliver a quarter-point rate cut amid tariff-driven growth concerns.

Yen Strengthens; Commodities Surge

USD/JPY moved lower by 0.89%, reflecting safe-haven flows ahead of the Fed meeting. Commodities surged, with oil prices rising over 3% on geopolitical concerns and improving demand outlooks, while gold gained 2.37% amid broader market uncertainty. Copper advanced 1.42%.

Currencies at close: EUR/USD +0.50%, USD/JPY -0.89%, GBP/USD +0.65%, AUD/USD +0.46%; Dollar index -0.60%.