GBP/USD retreats by over 0.55% on Tuesday amid political turmoil in the UK, as pressure mounts on Prime Minister Keir Starmer to step aside following cabinet resignations. Technically, the formation of a ‘dark-cloud cover’ suggests further downside if sellers drive the pair below 1.3500.

NZD/USD trades around 0.5940 on Tuesday at the time of writing, down 0.41% on the day, pressured by stronger-than-expected inflation data from the United States (US).

The AUD/USD pair fell toward the 0.7220 region on Tuesday after hotter-than-expected United States (US) inflation data boosted the US Dollar (USD) and reinforced expectations that the Federal Reserve (Fed) may keep interest rates elevated for longer.

USD/JPY trades around 157.65 on Tuesday at the time of writing, up 0.30% on the day.

EUR/JPY falls by some 0.18% on Tuesday as the Japanese Yen strengthened after US Treasury Secretary Scott Bessent said excess volatility in the FX markets is undesirable. At the time of writing, the cross-pair trades at 184.93 after peaking at around 185.46.

MUFG’s Lee Hardman reports that the Pound (GBP) has weakened as UK political uncertainty intensifies after poor local election results for the government. EUR/GBP has risen and cable has fallen, with Gilts selling off modestly.

USD/CAD trades with a positive tone on Tuesday as a stronger US Dollar (USD) offsets support from elevated Oil prices for the Canadian Dollar (CAD). At the time of writing, the pair is trading around 1.3715, hovering near its highest level since April 16.

The Euro (EUR) trades under pressure against the US Dollar (USD) on Tuesday as hotter-than-expected US inflation data strengthens the Greenback and pushes US Treasury yields higher. At the time of writing, EUR/USD is trading around 1.1743, down roughly 0.35% on the day.

GBP/USD declines around 1.3525 on Tuesday at the time of writing, down 0.62% on the day, as the US Dollar (USD) benefits from renewed demand following stronger-than-expected US inflation data and a more cautious market mood.

MUFG’s Lee Hardman notes that the US Dollar’s (USD) rebound alongside higher Oil prices has lifted USD/JPY back towards 158.00, close to levels seen before suspected Japanese intervention.

EUR/GBP trims part of its earlier gains on Tuesday as traders assess rising political instability in the United Kingdom and stalled US-Iran negotiations.

Brazil IPCA Inflation below forecasts (0.7%) in April: Actual (0.67%)

BNY’s Bob Savage reports India is considering emergency steps to protect foreign exchange reserves as higher Oil prices widen the current account deficit. Measures under discussion include fuel price hikes, import restrictions on Gold and electronics, and tighter hedging rules.

The Canadian Dollar (CAD) accelerates its decline against the  US Dollar (USD) on Tuesday, with the USD/CAD pair rallying above 1.3700 and set to test its highest levels in nearly a month, at 1.3714.

The USD/JPY pair trades 0.26% higher to near 157.60 during the European trading session on Tuesday. The pair gains as the US Dollar (USD) outperforms its peers due to renewed tensions between the United States (US) and Iran.

Brown Brothers Harriman (BBH) Elias Haddad notes that USD/JPY has rebounded toward 157.75 after testing 155.00, with 160.00 described as a key line in the sand.

USD/CHF trades around 0.7815 on Tuesday at the time of writing, up 0.46% on the day, supported by renewed demand for the US Dollar (USD) amid fresh geopolitical tensions in the Middle East.

The Euro (EUR) is heading lower against the Dollar (USD) on Tuesday, trading below 1.1750 at the time of writing, after another rejection at the 1.1790 area on Monday.

GBP/USD falls to around 1.3530 on Tuesday at the time of writing, down 0.59% on the day, as renewed risk aversion supports the US Dollar (USD) against the British Pound (GBP).

EUR/JPY pares its daily losses, still remaining in the negative territory and trading around 185.10 during the European hours on Tuesday. The currency cross remains steady following the release of the German ZEW Survey data.

Eurozone ZEW Survey – Economic Sentiment came in at -9.1, above expectations (-20) in May

Germany ZEW Survey – Economic Sentiment registered at -10.2 above expectations (-19.8) in May

Germany ZEW Survey – Current Situation came in at -77.8 below forecasts (-77.5) in May

The USD/JPY pair reverses a knee-jerk decline to the 156.75-156.70 region and climbs to the top end of its daily range during the first half of the European session.

Michael Pfister at Commerzbank discusses rising pressure on United Kingdom (UK) Prime Minister Keir Starmer and the implications for the Pound. Markets increasingly expect his resignation, with attention turning to potential successors’ fiscal stances.

Rabobank's Senior Market Strategist Benjamin Picton highlights comments from Australian Prime Minister Albanese and Treasurer Chalmers ahead of the Commonwealth budget, stressing concerns over an expensive housing market and planned tax changes.

The AUD/USD pair continues with its struggle to find acceptance above the 0.7250 level and attracts fresh sellers on Tuesday as rising US-Iran tensions boost the safe-haven US Dollar (USD).

ING’s Francesco Pesole notes EUR/USD has held up with risk sentiment despite Gulf tensions, but warns current levels may not withstand an equity correction.

The USD/CAD pair trades 0.12% higher to near 1.3695 during the European trading session on Tuesday.

The GBP/JPY cross struggles to capitalize on the previous day's bounce from the 100-day Simple Moving Average (SMA) and attracts heavy intraday selling on Tuesday.