The U.S. dollar weakened against the euro for the third day but edged up against the yen amid U.S.-China tensions and dovish Fed remarks. The Fed’s Beige Book highlighted economic weaknesses, leading to expectations of rate cuts. The dollar index was down 0.05% at 98.64 as U.S. Treasury yields remained near multi-week lows.

Investors are monitoring China’s rare earth export controls, criticized by U.S. officials, as a potential bargaining ploy in trade talks. Amid tensions, President Trump plans to meet with Chinese President Xi Jinping. Escalating trade tensions are impacting European supply chains and global output, causing concern among European governments.

The euro rose to a one-week high after French Prime Minister survived a no-confidence vote, easing political crisis fears. The yen briefly firmed but remains stable ahead of Japan’s prime ministerial vote next week. The Australian dollar stayed steady after unemployment hit a four-year high, increasing the case for interest rate cuts due to China-related news.

China’s yuan strengthened against the U.S. dollar after the central bank set its strongest daily midpoint in a year. Markets remain cautious about further U.S. rate drops and are closely monitoring global trade tensions.

Read more at Yahoo Finance: Dollar mixed vs yen, euro, China’s rare earths, rate outlook in focus