Currency Markets Brace for Impact Amid Trade Talks and Political Tensions

The dollar remained stable on Tuesday as investors focused on trade negotiations before the August 1 tariffs deadline, while the yen showed slight fluctuations following Japan's upper house election. The markets are watchful of political uncertainty and its impact on striking trade deals with the U.S.

On Tuesday, the dollar traded within a narrow range after a brief drop earlier in the week. Investors are closely monitoring trade talks, with an imminent August 1 deadline looming for countries to reach agreements with the U.S. to avoid hefty tariffs.

The Japanese yen mainly retained its prior session's gains, following Japan's upper house election results, which were as expected. However, the focus now shifts to Japan's trade negotiations with Washington and the political future of Prime Minister Shigeru Ishiba.

The uncertainty surrounding global tariffs continues to affect the foreign exchange market, creating a tight trading range for many currencies while Wall Street stocks surge. Concerns also revolve around the Federal Reserve's autonomy amid President Trump's frequent criticisms and calls for interest rate cuts.

(With inputs from agencies.)