USDJPY United States Dollar vs Japanese Yen

The U.S. dollar declined against its major counterparts in early European deals on Tuesday, as investors became cautious over news that the U.S. Donald Trump had reportedly disclosed highly classified information to Russian officials during a meeting last week, eroding his support from Republicans and putting his economic agenda in trouble.

The Washington Post reported on Monday that Trump revealed a classified information about a planned Islamic State operation to Russian Foreign Minister Sergei Lavrov and Russian Ambassador Sergei Kislyak, which had been tightly restricted within the United States government and among close US allies.

The information shared with the Russians, according to the Washington Post report, is said to have endangered cooperation from the U.S. ally that had access to the inner workings of the Islamic State.

Further weighing on the currency was a disappointing report on New York Fed's Empire Manufacturing survey in May, which came on the heels of weak retail sales and inflation data on Friday. According to the CME FedWatch Tool, the likelihood of a 25 basis point hike in June had dropped to 70 percent following the report.

The U.S. treasury yields declined, with the benchmark yield on 10-year treasuries falling 2.33 percent, while that of 2-year equivalent was down by 1.30 percent. Yields move inversely to bond prices.

Investors await reports on housing market and industrial production later in the day for more clues about the economy.

The currency was lower against its major rivals on Friday, with the exception of the yen.

The greenback that closed yesterday's trading at 1.2894 against the pound declined to 1.2933. The next possible support for the greenback is seen around the 1.30 region.

The greenback slid to 1.1036 against the euro, its lowest since November 2016. Continuation of the greenback's downtrend may see it challenging support around the 1.115 area.

The greenback weakened to an 8-day low of 0.9923 against the Swiss franc, compared to 0.9965 hit late New York Monday. The greenback is seen finding support around the 0.97 mark.

The greenback reversed from an early high of 113.79 against the yen, edging down to 113.25. If the greenback-yen pair extends decline, it may locate support around the 112.5 level.

Figures from the Ministry of Economy, Trade and Industry showed that Japan's tertiary activity index decreased unexpectedly in March.

The tertiary activity index dropped 0.2 percent month-over-month in March, after remaining flat in February. Meanwhile, economists had expected a 0.1 percent increase for the month.

The greenback retreated to 1.3606 against the loonie and 0.7431 against the aussie, from its early highs of 1.3638 and 0.7405, respectively. On the downside, 1.33 and 0.755 are possibly seen as the next support levels for the greenback against the loonie and the aussie, respectively.

Looking ahead, U.K. consumer and producer prices for April and house price index for March, German ZEW economic sentiment index for May, Eurozone GDP data for the first quarter and trade data for March are due shortly.

In the New York session, U.S. building permits, housing starts and industrial production for April are set for release.

At 11:30 am ET, the European Central Bank Governing Council member Ewald Nowotny speaks about monetary policy at an event hosted by the Principality of Liechtenstein, in Vienna.

The European Central Bank board member Benoit Coeure speaks at the annual dinner of the ECB's Bond Market Contact Group in Frankfurt, Germany at 1:00 pm ET.

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