The euro dropped 0.5% against the dollar to $1.1707, while sterling slid 0.5% to $1.3521

The U.S. dollar gained against most currencies on Tuesday except against the yen, recovering from losses the previous session, as investors consolidated positions ahead of inflation reports this week.

U.S. producer price inflation data is due on Wednesday followed by the consumer price inflation reading on Thursday. The data points will be in focus to gauge the impact of tariffs on prices in the country.

The dollar briefly dropped after a report showing downward revisions of nearly a million fewer jobs to previous government estimates for the April 2024 to March 2025 period. That indicated a much weaker labor market than what initial figures showed in that 12-month period.

But the payrolls data was largely shrugged off.

In afternoon trading, the euro dropped 0.5% against the dollar to $1.1707, pushing the dollar index 0.4% higher at 97.78. Earlier in the session, the dollar index declined to a seven-week low.

Against the Swiss franc, the dollar added 0.6% to 0.7976 franc after earlier reaching a six-week low.

Even though the dollar gained on Tuesday, Elias Haddad, senior markets strategist at Brown Brothers Harriman in London said the big theme right now is that the more recent dovish turn in Federal Reserve policy will lead to the U.S. dollar to new cyclical lows.

The big reason is that the Fed will now prioritize its maximum employment mandate over price stability because monetary policy is moderately restricted. Any rally, or any relief rally in the U.S. dollar is not sustainable, Haddad added.

Elsewhere, sterling slid 0.5% to $1.3521, while the commodity-linked currencies – the Australian, New Zealand, and Canadian dollars, all slipped against the U.S. dollar.