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NEW YORK (Reuters) -The U.S. dollar rose on Tuesday, rebounding from a six-week low against the euro, even as investors remained concerned about potential economic damage from the trade war waged by President Donald Trump’s administration. “We had a big selloff in the dollar and we have it bouncing back a bit today … I don’t think there has been a lot of fresh news to say the dollar has turned in any kind of meaningful way,” said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. “I’d say the bounce is still fairly constrained, fairly limited,” he said. The dollar was up 0.9% against the yen at 144.00. The euro fell 0.6% to $1.1371, having briefly touched a six-week high of $1.1454. Data earlier showed inflation in the euro zone slowed below the European Central Bank’s target of 2%, underpinning expectations for a rate cut later this week. For the year, the dollar is down about 9% against the euro. While global equity markets have broadly recovered from an early-April selloff in the wake of the on-again, off-again saga of Trump’s tariff threats, the greenback remains pressured. U.S. duties on imported steel and aluminium are set to double to 50% starting on Wednesday, the same day the Trump administration expects countries to submit their best offers in trade negotiations. Trump and Chinese President Xi Jinping were likely to have a call soon to iron out trade differences, Treasury Secretary Scott Bessent said on Sunday, although on Monday there was an angry rejection from China’s Commerce Ministry of U.S. accusations that Beijing violated their trade agreement. “Trade developments remain crucial. Reports suggest China is gaining leverage over the U.S. through its control of chip supply chains and rare earths,” ING strategist Francesco Pesole said. “Trump and Xi Jinping are set to speak this week, and past direct talks have sometimes eased tensions. That leaves room for a positive surprise that could help the dollar at some point this week,” he said. On Tuesday, data showed U.S. job openings increased in April, but layoffs picked up in a move consistent with a slowing labor market amid a dimming economic outlook because of tariffs. Federal Reserve officials on Tuesday argued again for caution on monetary policy as Trump’s trade war continues to inject substantial amounts of uncertainty and the risk of economic weakness into the outlook. Fiscal worries have also given rise to a broad “sell America” theme that has seen dollar assets from stocks to Treasury bonds dropping in recent months. Those concerns come into sharp focus this week as the Senate starts considering the administration’s tax cut and spending bill, estimated to add $3.8 trillion to the federal government’s $36.2 trillion in debt over the next decade. Still, traders in the foreign exchange options market are positioned for the U.S. currency to weaken further. The British pound was 0.2% lower at $1.3519 on Tuesday, ahead of a raft of Bank of England speakers and an auction of long-dated government bonds that may offer a gauge of investor confidence in Britain’s finances. Bitcoin, the world’s largest cryptocurrency by market capitalisation, was 1.2% higher on the day at $106,219. (Reporting by Saqib Iqbal Ahmed; Additional reporting by Amanda Cooper and Rocky Swift; Editing by David Evans, William Maclean and Nia Williams)
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