Global currencies under pressure as dollar strengthens and yen weakens

The Japanese Yen weakened to its lowest level against the US Dollar in nearly four decades on the final trading day of the second quarter, as investors turned their attention to a series of major economic releases and ongoing geopolitical developments.

The USD/JPY pair climbed above the 162.00 mark during Asian trading, reaching its highest level since 1986 before easing slightly.

Despite the brief pullback, the pair regained momentum during European trading and was last seen hovering around 162.30.

Yen weakens despite official warnings

The Japanese Yen remained under pressure even as Japanese officials reiterated their willingness to intervene in the foreign exchange market if necessary.

Japan's Finance Minister Satsuki Katayama said the government would respond appropriately to currency movements whenever required. Separately, Chief Cabinet Secretary Minoru Kihara stated during a regular press conference that authorities remain prepared to take necessary action in the foreign exchange market.

However, he declined to comment on any specific exchange rate level.

Meanwhile, domestic economic data offered little support to the Japanese currency.

Japan's unemployment rate remained unchanged at 2.5% in May, in line with market expectations.

Dollar strength builds ahead of key US data

The US Dollar strengthened against most major currencies early Tuesday, with the US Dollar Index recovering towards the 101.30 level after ending Monday's session in negative territory.

Market participants are now awaiting several key economic releases.

In the United States, investors will monitor the May JOLTS Job Openings report from the Bureau of Labor Statistics and the Conference Board's June Consumer Confidence report.

Attention is also turning towards the June Nonfarm Payrolls (NFP) report, due on Thursday.

Indian rupee opens lower

The Indian Rupee opened marginally weaker against the US Dollar on Tuesday.

The USD/INR pair edged higher towards 94.57 as the stronger US Dollar continued to weigh on the domestic currency.

Investor caution ahead of the upcoming US Nonfarm Payrolls data also supported demand for the greenback.

Geopolitical uncertainty weighs on risk sentiment

Conflicting reports surrounding the next round of discussions between the United States and Iran contributed to a cautious market mood, prompting investors to avoid risk-sensitive assets.

US President Donald Trump said on Monday that Iran had requested a meeting following the exchange of strikes over the weekend and indicated that the meeting would take place in Qatar on Tuesday.

However, Iran's Foreign Ministry presented a different account, stating that its delegation would travel to Doha to pursue the release of frozen funds and that there were no plans to meet US negotiators.

The conflicting statements added to the uncertainty across global financial markets.

Euro retreats after strong start to week

The euro began the week on a positive note, with the EUR/USD pair gaining more than 0.3% on Monday.

However, the common currency came under renewed selling pressure during Tuesday's European session, slipping below the 1.1400 level.

Earlier, European Central Bank President Christine Lagarde said in her opening remarks at the ECB Forum on Central Banking that policymakers are likely to face future shocks capable of pushing inflation away from the target.

She added that Europe's resilience would enable the central bank to raise interest rates without creating financial stress.

Pound gives back some gains

The British pound also retreated after a strong performance at the start of the week.

GBP/USD rose nearly 0.5% on Monday, touching a fresh weekly high above 1.3250 before correcting lower to trade around 1.3230 during European trading.

Economic data from the United Kingdom showed that the economy expanded by 0.6% on a quarterly basis in the first quarter, matching both the preliminary estimate and market expectations.

Australian dollar hits three-month low

The Australian Dollar remained under pressure, with AUD/USD falling below 0.6875 to its lowest level in three months.

Minutes from the Reserve Bank of Australia's June monetary policy meeting indicated that policymakers remain prepared to take further measures to maintain price stability, including the possibility of additional interest rate hikes if required.