Dollar holds steady as markets assess US-Iran tensions and Fed meeting

Global markets remained cautious on Tuesday as investors assessed conflicting signals over potential US-Iran ceasefire talks and looked ahead to the Federal Reserve's monetary policy meeting.

The relief rally sparked by the decision to pause strikes faded quickly, with the US Dollar Index ending Monday virtually unchanged after opening lower.

Oil prices also remained under pressure following a sharp decline in West Texas Intermediate crude, while weakness in technology stocks added to the cautious mood across markets.

Technology stocks weigh on market sentiment

Selling pressure surrounding technology stocks added to the cautious tone during the second half of Monday's session.

The weakness in technology shares contributed to a deterioration in broader market sentiment.

The cautious mood continued into Tuesday's early European trading session.

Nasdaq futures were down about 1% in early European trade.

At the same time, the US Dollar Index remained steady at around 101.50.

Investors are also awaiting the release of the Conference Board's Consumer Confidence Index data for July.

The data is scheduled to be published later on Tuesday and could provide additional insight into consumer sentiment.

Oil prices remain under pressure

Oil markets also remained relatively quiet early Tuesday following a sharp decline in the previous session.

West Texas Intermediate crude lost about 9% on Monday.

The benchmark was trading modestly lower early Tuesday and remained around $83.50 per barrel.

The subdued price action came as investors continued to assess the latest developments involving the United States and Iran.

The market remained sensitive to further updates as traders weighed the possibility of changing geopolitical conditions.

Euro and pound remain under pressure

EUR/USD turned lower during the second half of Monday's session before ending the day flat.

The pair remained relatively quiet during the European morning on Tuesday.

It traded sideways below the 1.1400 level as investors continued to assess the broader market environment.

GBP/USD also struggled to maintain its earlier bullish momentum.

The pair ended Monday in negative territory and was consolidating around 1.3300 during the early European session on Tuesday.

The movements in both currency pairs reflected the cautious tone across markets.

Investors continued to monitor developments in the US Dollar as well as broader risk sentiment.

Yen tracks fiscal policy comments

USD/JPY declined below 163.50 during Monday's European session before recovering in the second half of the day.

The pair remained steady at around 163.70 early Tuesday.

Japan's Finance Minister Satsuki Katayama said earlier on Tuesday that authorities needed to communicate with financial markets and the Japanese Government Bonds market ahead of the budget compilation.

Katayama also said that the government needed to explain the administration's intentions regarding its fiscal policy stance.

The comments came as investors continued to monitor developments in Japan's financial markets.

The yen pair remained relatively stable in early Tuesday trading following its recovery from Monday's decline.

Australian dollar under pressure

The Australian dollar also remained on the back foot early Tuesday.

Reserve Bank of Australia Governor Michele Bullock said earlier in the day that the central bank remained ready to raise the policy rate if necessary.

Her comments came as markets continued to assess the outlook for Australian monetary policy.

The remarks kept attention focused on inflation and the potential direction of interest rates.

AUD/USD traded below 0.7000 early Tuesday.

The pair remained under pressure as investors responded to the latest comments from the RBA governor.