The US Dollar started out strong today before falling flat, with the bond market fretting over former US President Donald Trump’s spending plans. The possibility of Trump being reelected as President increased significantly after the US Supreme Court ruled on Monday that Trump has partial immunity in the court cases related to the riots that ended in a breach at the US Congress. With the recent spending plans revealed by the former President, the bond market is worried about where the money will come from, and local market conditions could lead to higher inflation again.

On the US economic front, the calendar is relatively light in terms of data. However, from a speaker's point of view, the big guns are out: ECB President Christine Lagarde and Fed Chairman Jerome Powell will take the stage to speak on policy outlook at the ECB Forum.

EUR/USD is relatively flat on the day. The Euro gathered strength to start the week as markets reacted to the outcome of the first round of France's parliamentary election, where Marine Le Pen's far-right National Rally party won by a smaller margin than initially projected. The positive impact of this development on the Euro's valuation faded away later in the day, causing EUR/USD to erase its daily gains. Earlier today, data published by Eurostat showed that the Harmonized Index of Consumer Prices, the ECB’s preferred gauge of inflation, rose 2.5% on a yearly basis in June, down from 2.6% in May. This reading came in line with market expectations. In the same period, the core HICP, which excludes volatile food and energy prices, rose 2.9%, matching May's increase. These figures failed to trigger a noticeable market reaction.

GBP/USD has rebounded sharply against the dollar this morning as all eyes are on the ECB Forum. The negative shift seen in risk sentiment helped the USD find demand on Tuesday and didn't allow GBP/USD to stage a rebound. Reflecting the souring mood, US stock index futures are down between 0.3% and 0.5%. Markets currently price in a nearly 35% probability of the Fed leaving the policy rate unchanged in September, according to the CME FedWatch Tool. If Powell acknowledges an improving inflation outlook following last Friday's Personal Consumption Expenditures Price Index, the USD could have a hard time finding demand. However, market positioning suggests there is room for further USD strength if Powell pushes back against market expectations for a rate reduction in September.

USD/CAD is higher on the day as this uptick in the pair is supported by the firmer Greenback and higher US Treasury bond yields. Later in the day, the Canadian S&P Global Manufacturing Purchasing Managers Index (PMI) for June is due, which is estimated to improve to 50.2 from 49.3 in May. San Francisco Fed President Mary Daly stated that the US central bank remains data-dependent and didn't give an estimation of a policy path forward. The cautious tone of the Fed officials continues to underpin the USD in the near term despite weaker US data.