Investing.com– Most Asian currencies edged lower on Tuesday as the dollar found some strength before a testimony by Federal Reserve Chair Jerome Powell, while the yen languished around 38-year lows. 

Sentiment towards Asia also remained on edge amid persistent concerns over new European import tariffs on China, which could draw retaliatory measures from Beijing and spark a trade war. 

The and rose slightly in Asian trade, steadying after clocking steep losses in the past week amid increased bets on interest rate cuts by the Fed.

is set to offer more cues on this trend later on Tuesday. Beyond Powell, data is also on tap later this week, while a slew of other Fed officials are also set to speak. 

Japanese yen fragile as USDJPY retakes 161

The yen continued to lag its Asian peers, with the pair rising 0.1% on Tuesday and coming back above the 161 yen level. 

The currency found little support as a swathe of weak Japanese economic readings furthered bets that the Bank of Japan will have limited headroom to raise interest rates further.

While recent average cash earnings data did show overall wages were picking up, the reading was still softer than expected for May. Other recent readings on the Japanese economy also pointed to continued weakness. 

This kept traders largely short on the yen, with continued warnings on government intervention in the currency market also going mostly unheeded.

Chinese yuan weak, USDCNY near 7-mth high 

The Chinese yuan was also among the more laggard performers in recent sessions, with the pair rising 0.1% and coming close to a seven-month high.

The yuan was largely battered by increased concerns over a trade war with the West, after the EU imposed tariffs on Chinese electric vehicle imports despite objections from Beijing. 

Markets were now watching for the impact of the imports, and whether China would retaliate.

Waning optimism over a Chinese economic rebound also weighed on the yuan in recent weeks, especially following a string of weak data points through June. Focus this week was on upcoming and data for more cues on the economy. 

Broader Asian currencies moved in a flat-to-low range. The Australian dollar’s pair was flat after data showed consumer sentiment in the country worsened further in early-July.

The South Korean won’s pair was flat, as was the Singapore dollar’s pair.

The Indian rupee’s pair rose slightly and remained in sight of record highs.