The US Dollar (USD) has come under fresh downside pressure on Tuesday, slipping back to the area of two-day lows as shrinking fiscal jitters in France appear to have lent some support to the broader risk-linked galaxy.

The Pound Sterling advances some 0.40% on Tuesday as the Greenback retreats from multi-month highs, boosted by hawkish comments by a Bank of England (BoE) member of the Monetary Policy Committee (MPC), while a widening of the US trade deficit weighed on the Greenback.

Scotiabank strategists Shaun Osborne and Eric Theoret report that the Canadian Dollar (CAD) is trading flat against the US Dollar, with markets showing little reaction to Quebec’s provincial election.

AUD/USD gains 0.13% on Tuesday and trades around 0.6980 at the time of writing. The Australian Dollar (AUD) benefits from a modest pullback in the US Dollar (USD), as easing US Treasury yields provide support to the pair.

EUR/USD trades on the front foot on Tuesday, drawing support from a modest pullback in the US Dollar (USD). However, concerns over France’s fiscal position keep the Euro’s (EUR) gains in check. At the time of writing, the pair trades around 1.1255, up 0.29% on the day.

TD Securities’ Macro Research team, led by Jayati Bharadwaj with contributions from Howard Du and Linda Cheng, argues that recent EUR/USD weakness has been driven by high Oil and diesel prices and French OAT concerns.

Royal Bank of Canada’s (RBC) Nathan Janzen notes Canada’s trade balance swung to a $4.2 billion surplus in August, helped by higher energy prices and a rush of exports to the United States (US) ahead of new tariffs.

USD/CAD falls 0.15% on Tuesday and trades around 1.4240 at the time of writing, pulling away slightly from recent highs near 1.4300. The Canadian Dollar (CAD) nevertheless remains vulnerable, weighed down by falling Oil prices as signs of improving global crude supply continue to emerge.

TD Securities highlights a constructive Brazilian Real (BRL) backdrop, with diversified commodity exposure and strong carry. Their short-term fair value model places USD/BRL near 5.00 excluding political risk, but they favor the cross below 5.00 toward 4.60 longer-term.

Rabobank's Senior FX Strategist Jane Foley says markets see limited scope for another Bank of Japan (BoJ) policy move at the October meeting, with expectations instead centred on December.

USD/JPY holds firm on Tuesday as the Japanese Yen (JPY) trades on the defensive across the board. However, a softer US Dollar (USD), weighed down by a pullback in US Treasury yields, and intervention concerns around the 160 level limit the upside, keeping the pair range-bound.

DBS Bank’s Radhika Rao notes that onshore financial markets are under pressure from global developments, with foreign portfolio investors pulling out around $6.3bn and USD/INR trading back above 96.00.

United Overseas Bank strategists Quek Ser Leang and Lee Sue Ann note that USD/JPY lacks clear directional cues in the short term, with intraday price action expected to remain confined between 157.55 and 158.45. Over the next one to three weeks, they see the pair trading in a broader 156.35–158.70 range. On a one to three month horizon, they highlight building downward momentum and potential further USD/JPY weakness.

OCBC strategists Sim Moh Siong and Christopher Wong note Brazilian assets rallied after Flávio Bolsonaro’s stronger-than-expected first-round result boosted expectations for a more market-friendly policy mix.

EUR/GBP fluctuates between gains and losses on Tuesday, pausing a seven-day selloff driven by sharp weakness in the Euro (EUR) amid growing concerns over France’s fiscal position.

OCBC strategists Sim Moh Siong and Christopher Wong highlight EUR/USD caught between French political-fiscal risks and a potentially capped US Dollar. European bond turbulence is feeding expectations of a more dovish ECB, while US yields rise on economic resilience. Markets still price over three Fed hikes despite softer labour data, but OCBC expects only a moderate USD rally into year-end.

MUFG’s Lee Hardman highlights that the Euro remains under selling pressure, with EUR/USD testing support at 1.1200 as Spanish Prime Minister Pedro Sanchez calls an early election for November 29. Opinion polls point to gains for the People’s Party, potentially in coalition with VoX.

USD/CAD extends its gains for the third consecutive day, trading around 1.4270 during European hours on Tuesday. The pair remains close to freshly reached 18-month highs as the commodity-linked Canadian Dollar (CAD) struggles amid lower oil prices.

Eurozone Retail Sales rises at a 0.1% pace Month-on-Month (MoM) in August, slower than 0.2% estimates.

The GBP/USD pair attracts some dip-buyers near the 1.3200 mark on Tuesday and hits a fresh daily high during the first half of the European session.

MUFG’s Lee Hardman notes that the Japanese Yen has softened after a Bloomberg report on the GPIF’s September meeting, lifting USD/JPY back above 158.00.

Francesco Pesole at ING highlights that the Euro (EUR) is under pressure from French bond market turbulence, which is adding a fiscal risk premium and driving a repricing lower in European Central Bank (ECB) rate expectations.

USD/CHF extends its gains for the second successive day, trading around 0.8320 during European hours on Tuesday. The pair is moving higher as the US Dollar (USD) gains momentum, largely driven by a surge in safe-haven demand amidst escalating geopolitical conflicts.

Here is what you need to know on Tuesday, October 6:

The USD/JPY pair attracts some buyers following the previous day's two-day price moves, trading above the 158.00 mark during the early part of the European session on Tuesday.

Tatha Ghose at Commerzbank reports Turkey’s September Consumer Price Index (CPI) fell below 30% year-on-year, with softer month-on-month gains, creating scope for the central bank to cut rates by 100 bps.

The NZD/USD pair loses momentum to around 0.5590 during the early European trading hours on Tuesday. The New Zealand Dollar (NZD) weakens near the lowest since November 2025 against the US Dollar (USD), pressured by elevated US Treasury yields and uncertainty ahead of the November general election.

The Australian Dollar (AUD) gives back its early gains after rising to near 0.6975 and turns marginally lower at around 0.6964 against the US Dollar (USD) during the European trading session on Tuesday.

The Euro (EUR) keeps heading lower against a firmer US Dollar (USD) on Tuesday, as growing political uncertainty and a deteriorating fiscal outlook have renewed fears of debt contagion in the region.

United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann note that EUR/USD briefly broke below 1.1180 to a 17‑month low before rebounding to close around 1.1220. Intraday, they expect consolidation inside a defined range.