On Tuesday, the U.S. dollar began to strengthen after yet another poor batch of Chinese trade data pressured the yuan, the Australian dollar, and the New Zealand dollar. The yen also weakened after Japanese real wages fell for a 15th consecutive month.

Figures released on Tuesday revealed that China's imports and exports both declined far faster than anticipated in July, with imports falling 12.4% from a year earlier and exports falling 14.5%. This is yet another indication of the nation's sluggish economic recovery and weakening global demand.

According to figures released on Tuesday, the constant price increases in Japan caused real earnings to decline for the fifteenth consecutive month in June. However, nominal pay growth remained strong despite rising compensation for high-income workers and a growing labor shortage.

Currency movements were small in the early Asian day, but when risk sentiment weakened and Asian markets failed to follow Wall Street's advance, the dollar increased its gains throughout the trading session and into the European morning.

The dollar index climbed by 0.3% to 102.36, moving up from Friday's one-week low following a conflicting U.S. jobs report that suggested a slowing but still robust labor market.

EUR/USD slipped 0.2% at $1.0978.

GBP/USD dipped 0.2% to $1.2757.