Euro Strengthens Amid German Coalition Hopes; Dollar Falters on Trade Tensions

The Euro rose as reports suggested German parties might form a coalition, while U.S. dollar weakened amid trade disputes. The yen and Swiss franc gained amid recession fears, with China's yuan hitting a record low. Markets are wary of escalating U.S.-China trade tensions.

The Euro rallied on Tuesday following encouraging news about potential coalition formation among German political parties. Reports suggest Germany's conservatives, led by chancellor-in-waiting Friedrich Merz, reached a tentative agreement with the Social Democrats. However, two insiders refuted that a deal was finalized.

Meanwhile, the U.S. dollar weakened against major currencies as investors remain wary of ongoing trade disputes initiated by President Trump's tariffs. These tariffs have heavily impacted markets. The Euro rose 0.52%, reflecting a resurgence from its decline over the prior two days.

Investors also turned towards safe-haven currencies like the yen and Swiss franc due to growing concerns about a global economic downturn. As tensions escalate between the U.S. and China, Beijing has vowed resistance against U.S. tariffs, influencing downward trends in China's yuan.

(With inputs from agencies.)