The US dollar rose in European trade on Tuesday against a basket of major rivals, resuming the gains and approaching three-month highs as US 10-year treasury yields rallied.

It comes ahead of decisive US data later today, which would provide evidence on upcoming Fed interest rate cuts this year.

The Index 

The dollar index rose 0.1% to 104.37, with a session-low at 104.21.

The index lost 0.1% yesterday on profit-taking, away from three-month highs at 104.57. 

US Yields 

US 10-year treasury yields rose 0.65% on Tuesday on track for the third profit in a row, hitting a 3-⅕ month high at 4.312%. 

US Rates 

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut stood at 97% in November. 

Now investors await a batch of important US data later today that would provide important signals on the future of the US economy.

US housing prices are expected up 4.9% in August, slowing down from 5.9% in July. 

The CB consumer confidence index is expected up to 99.5 in October from 98.7 in September. 

The JOLTS job opportunities survey is expected to show 7.98 million new vacancies in September, down from 8.04 million in August. 

The Japanese yen rose in Asian trade on Tuesday against a basket of major rivals, while trying to recover from three-month lows against the dollar, on active short-covering after recent losses, while Japan’s finance minister vowed to monitor forex movements. 

The gains are also boosted by a stall in US 10-year treasury yields, as investors shun risks ahead of crucial US data later this week.

The Price 

The USD/JPY fell 0.3% today to 152.85 yen per dollar, with a session-high at 153.36. 

The yen lost 0.7% yesterday against the dollar, hitting three-month lows at 153.88.

As the Japanese governing coalition lost its majority in the Diet, it sparked a state of uncertainty in the markets. 

Japan is facing a period of political maneuvering in order to form a new coalition, after the LDP party and its partners won 215 seats in the Diet, below the 233-seat majority. 

Japan’s finance minister Katsunobo Kato said on Tuesday that authorities will be cautious when dealing with forex movements, including trades made by speculators. 

He asserted that authorities are keeping a close eye, in what could be a hint at intervention once more if the yen went out of control.

The yen tumbled sharply once again amid the political chaos in Japan, which might hamper efforts to tighten monetary policies in upcoming months. 

Kato added that the government will organize a new economic package to prop up the economy and support the fundamentals.

US Yields 

US 10-year treasury yields fell 0.5% on Tuesday away from three-month highs at 4.300%, on track for the first loss in three sessions amid active profit-taking.

The developments came ahead of important US housing prices, consumer confidence, and job opportunities data later today. 

The data will showcase the flexibility of the US economy and will likely change upcoming odds of US interest rate decisions in November and December. 

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut stood at 97% in November. 

A smaller long-term yield gap between Japan and the US would serve to boost the appeal of Japanese bonds and underpin the yen eventually. 

Oil prices fell on Monday with losses increasing as the risks of geopolitical tensions in the Middle East faded, following a military strike by Israel on Iran that avoided critical nuclear or oil infrastructure. 

City Group analysts have reduced their outlook for Brent price by $4 to $70 a barrel in the last three months of the year, as the Middle East military operations will likely not impact oil supplies. 

US West Texas crude is expected by analysts to hover around $65 a barrel in 2025, with a tilt lower if OPEC+ increased supplies to the market. 

On trading, Brent December futures fell 6.1% today, or $4.63 to $71.42 a barrel. 

US crude futures due in December tumbled 6.2%, or $4.4 to $67.38 a barrel. 

US stock indices rose on Monday as investors await the earnings result of several major corporations this week. 

The list of corporations scheduled to announce results this week include Alphabet, Microsoft, Apple, Amazon, Meta, just a few days before the US presidential elections on November 5. 

Investors also await a batch of US labor data this week, including job opportunities, private sector employment, and unemployment claims data, in addition to the all-important US payrolls report on Friday

On trading, Dow Jones rose 0.6% as of 14:12 GMT to 42,390 points, while S&P 500 rose 0.5% to 5836 points, as NASDAQ added 0.6% to 18,635 points.