Investing.com – The U.S. dollar strengthened in early European trading on Tuesday, rebounding after piercing overnight losses, while the euro fell after faint employment data in Germany.

At 04:45 ET (08:45 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, rose 0.1% to 104.165, after previously falling below 104 for the first time since April 9.

JOLT data in focus

The dollar stabilized on Tuesday after piercing losses earlier in the week, after data showed a second straight month of slowing industrial activity and an unexpected decline in construction spending.

Signs of economic weakness have raised the possibility of the Federal Reserve cutting interest rates later this year, and federal funds futures currently indicate that the odds of a rate cut in September are about 59%, down from about 55% on Friday, according to LSEG data.

A more vital release is planned later in the session in the form of the April release, which is a closely watched precursor to Friday’s key monthly US .

“The dollar is starting to show signs of weakening,” ING analysts said in a note. “Today’s U.S. JOLTS job vacancies data could determine whether recent dollar losses are merely swing trading or the start of an important new trend. We certainly see a downside risk for the dollar today.”

The euro is losing after faint employment data in Germany

In Europe, shares fell 0.1% to 1.0888, retreating after the pair rose to 1.0916 earlier in the session for the first time since March 21.

Data showed earlier on Tuesday that the number of people rose more than expected in May, rising by a seasonally adjusted 25,000, above the expected 10,000.

“The spring economic recovery has not really gained momentum this year,” said the head of the labor office, Andrea Nahles. “We still need a lot of time to improve.”

The council signaled a rate cut at its next meeting on Thursday, but a rise in inflation in last week’s data may have officials wondering when the next easing will occur.

fell 0.2% to 1.2776, falling after earlier rising to its highest level since March 14.

A potentially pivotal policy meeting will take place later this month, and investors are waiting for clues as to when the interest rate cut cycle will begin.

Japanese yen sees demand

In Asia, quotations fell 0.5% to 155.34, with the yen continuing to gain against the dollar after falling below 156 overnight for the first time since May 21.

Meetings will be held later this month, and investors will be looking for clues as to whether another rate hike is expected.

was up 0.1% at 7.2439, remaining near recent six-month highs amid continued faint sentiment towards China.

rose 0.5% to 83,494 as the Indian rupee fell after early signs suggested a narrow victory for Prime Minister Narendra Modi in the closely watched 2024 general elections.

While the victory still represents a sporadic third term for Modi, the smaller majority than he expected suggests greater difficulty in initiating economic reforms.