The US Dollar rallied past 98.86, up 0.74% at four-day highs, despite US Treasury yields plunging. This move came despite the release of worse-than-expected US Retail Sales data in May and a softer reading on Industrial Production. On Wednesday, Initial Jobless Claims for the last week, Housing Starts, Building Permits, and the Federal Open Market Committee (FOMC) policy decision would set the tone for the Greenback.

Consequently, most G8 forex currencies were laggards compared to the US Dollar. The EUR/USD fell below 1.1500 even though German ZEW figures were positive, and ECB's officials took a page of the Fed's blueprint, adopting a wait-and-see mode, turning data dependent. Traders' focus would be on HICP figures for the Eurozone (EU), the EU Current Account, and ECB officials, led by Panetta, Nagel, Lane, and Vice-President Luis De Guindos.

The GBP/USD was pressured by risk aversion, even though investors seemed convinced that the Bank of England (BoE) would keep interest rates unchanged at Thursday's monetary policy meeting. Before the meeting, BoE officials will get an update on UK inflation figures on June 18.

The USD/JPY climbed above 145.00 as the Bank of Japan (BoJ) kept rates unchanged at 0.50%, though it flagged that "downside risks are bigger for the economy and prices," according to BoJ Governor Ueda. The docket will feature BoJ Ueda press conference, the Reuters Tankan Index, Machinery Orders, and the Balance of Trade.

Antipodeans reversed their course on Tuesday, ahead of the FOMC's meeting, as sentiment shifted sour. The AUD/USD fell 0.75%, settling at 0.6470, while the NZD/USD plummeted 0.77% to 0.6010. The docket in New Zealand will feature the Current Account, while Australia's schedule is absent.

In the commodities space, WTI rose over 4.82% after bouncing off daily lows of $69.56, reaching $73.33 per barrel, as the Middle East crisis deteriorates and the chances of the US entering the conflict increase.

Gold ended flat near $3,387 after traveling from a daily low of $3,366 and hit a peak of $3.403. Traders seem reluctant to drive Bullion higher, even though a poll made on central banks suggests that they would continue increasing their Gold reserves. This, along with the FOMC's monetary policy decision, would be crucial in providing direction for the precious metal.

Source: Fxstreet