Market sentiment remains sour over the threat of a military response to weekend’s Saudi attacks while poor Chinese data and pre-Fed caution also keep investors on the edge. The safe-haven bid for the US dollar keeps it buoyed against the Yen and Gold.

EUR/USD clings onto recovery gains on the 1.10 handle amid US-EU tariffs threat. US may slap tariffs on the EU due to the latter's illegal subsidies of Airbus. The focus stays on the German ZEW survey.

USD/JPY lacks follow-through amid weaker Treasury yields and Wall Street futures, having hit fresh seven-week tops at 108.36. However, uncertainty over the US-Japan trade deal caps the pair’s downside.

GBP/USD keeps the red above 1.2400 amid looming Brexit uncertainty. Following his meeting with the UK PM Johnson, Luxembourg PM Bettel reiterated that the EU won't give the UK another Brexit extension "just for the sake of another extension”.

A light European calendar ahead, with only the ZEW survey – Economic Sentiment due at 09:00 GMT. A below-forecast German Zew survey will likely accentuate bearish pressures around the EUR. The UK docket remains data empty.

The broader market risk sentiment and the USD price dynamics might continue to influence the market action and contribute towards producing some short-term trading opportunities amid absent relevant market-moving US economic releases on Tuesday except the US Industrial Production for August due 13:15 GMT.

Oil prices keep their corrective mode intact, down over 1%, awaiting fresh Mid-East developments and US weekly Crude Stocks data. Following its run-up based on geopolitical tension in Saudi Arabia, Crude Oil trades near $61.70 during the early session on Tuesday. The API Weekly Crude Oil Stock are released at 21:30 GMT.

Gold fails to carry recent upside amid the USD strength, and with fewer catalysts to rely on, prices trade near $1,496 during Tuesday’s early session. It should also be noted that investors await key monetary policy meeting decision from the US Federal Reserve, up for Wednesday, in order to determine near-term market moves.