The US Dollar Index is moving in response to political news from Europe ahead of Wednesday's main events: the US CPI for May and the Fed interest rate decision. Before that, two minor data releases will come to the markets today: the NFIB Business Optimism Index for May and the Redbook Index for the first week of June.

The main headline on Tuesday comes from France, where Marine Le Pen, head of the far-right movement, announced she will not be running in the upcoming snap elections at the end of June. This is seen as a victory for current French President Emmanuel Macron, as his government's chances of surviving these snap elections increase with Le Pen stepping down.

EUR/USD is lower on the day following news from Europe. ECB policymaker Francois Villeroy de Galhau commented today that they have "significant leeway" to lower rates before exiting restrictive policy, limiting the Euro's upside. ECB policymakers are concerned that progress towards the bank’s inflation target could stall as wage growth appears stubborn. On Monday, ECB President Christine Lagarde said in an interview that last week’s rate cut does not commit to a linear declining path. "There might be periods where we hold rates again," Lagarde said, according to Reuters.

GBP/USD is holding firm on the day, but the technical outlook doesn’t indicate a buildup of recovery momentum. The UK's Office for National Statistics (ONS) reported that the ILO Unemployment Rate edged higher to 4.4% in the three months to April from 4.3%. During the same period, the Employment Change was -140,000. Meanwhile, annual wage inflation, as measured by the change in the Average Earnings Excluding Bonus, held steady at 6%, matching market expectations. Mixed labor market data seems to be making it difficult for GBP/USD to gain traction. Investors may refrain from taking large positions ahead of Wednesday's US inflation data and the Fed’s monetary policy announcements.

USD/CAD continues its winning streak for a third successive session. The US Dollar remains strong as investors adopt a cautious stance ahead of the Fed’s rate decision. The Federal Reserve is expected to keep interest rates steady in the range of 5.25%-5.50% as it aims to curb inflation toward its 2% target. Additionally, the US headline and core CPI figures for May are estimated to show year-over-year increases of 3.4% and 3.5%, respectively. In Canada, the unemployment rate rose to a more than two-year high of 6.2% in May. However, the economy added more jobs than expected, and there was a notable increase in wage growth. Traders are likely to pay attention to BoC Governor Tiff Macklem, who is scheduled to speak on Wednesday at the Conference of Montreal 2024, where he will participate in a panel discussion about inflation.