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· The pound jumped to a near four-week peak against the dollar on Tuesday on reports of a delayed Brexit deadline, and the safe-haven yen moved off the weakest seen this year as a drop in U.S. equity futures checked investors’ risk appetite.

The pound was last up 0.4 percent on the day at $1.3143, sitting just below a session high of $1.3149, its highest since Jan. 31.

The dollar index, which measure the greenback versus a basket of its major rivals, was 0.1 percent lower at 96.329.

· Traders are eyeing a slate of data due in the second half of the week for fresh cues on the health of the global economy, including manufacturing activity figures from China and the United States and revised U.S. fourth quarter gross domestic product figures.

Investors are also looking to the Federal Reserve’s latest view on the economy and monetary policy. Fed Chairman Jerome Powell will testify before the Senate Banking Committee later on Tuesday, in the first of a two-day appearance before lawmakers.

· The yen rose a quarter of percent to 110.80 per dollar as investors sought the perceived safety of the Japanese unit after U.S. S&P 500 equity futures slipped in Asian trading.

· China’s yuan came off a seven-month peak scaled during the previous session.

The offshore yuan was down 0.1 percent at 6.6912 per dollar after rising as high as 6.6737, its strongest since mid-July last year, on Monday.

· The euro edged up to $1.1363 after advancing 0.2 percent on Monday.

· EUR/USD at Risk from Eurozone PMI, US Data, Fed Testimony?

EUR/USD may be vulnerable to several EU and US data-driven events this week. On Tuesday and Wednesday, Fed Chairman Jerome Powell will be testifying in front of congressional committees in the Senate and House, respectively. Then on Friday, the Chairman will deliver a speech outlining economic developments and longer-term challenges to the economy.

EUR/USD TECHNICAL ANALYSIS

The pair is climbing higher and appears to be breaching the 1.1358 resistance while having just closed above the late-January highs. Depending on the degree of the PMI data out of the EU, the pair may wobble on either side of this price barrier as investors anxiously wait for comments from Powell.

Despite the recent rise, it is important to keep in mind the bigger picture. Since April 2018, EUR/USD has declined over eight percent. The fundamental outlook suggests it will be difficult for the pair to have substantial upward climbs given the number of political and economic obstacles Europe must overcome.

· USD/JPY hits session lows as S&P 500 futures drop, Indo-Pak tensions flare

USD/JPY is currently trading at session lows near 110.75, having clocked high of 111.23 yesterday.

Further, reports of Indian airstrike in targets in Pakistan seem to have strengthened the bid tone around JPY. Asian currencies will likely take a hit and JPY could rise sharply if Indo-Pakistan tensions escalate into a war.

Looking ahead, the focus remains on the sentiment in the stock markets ahead of Fed's Powell testimony, scheduled in the NY session.

The central bank head is expected to reiterate "patience" on interest rate hikes and may offer clues on how long the Fed needs to be patient and how it plans to end its quantitative tightening program.

· British Prime Minister Theresa May will on Tuesday propose formally ruling out a no-deal Brexit in a bid to avoid a rebellion by lawmakers who are threatening to grab control of the divorce process, The Sun newspaper reported.

May on Tuesday will propose to her cabinet of senior ministers that she formally rules out a no-deal Brexit, opening the door to a delay of weeks or months to the March 29 exit date, The Sun newspaper reported.

· Factory activity in China is expected to have contracted for the third month in a row in February, a Reuters poll showed, adding to evidence of a further slowdown in the economy in the first quarter.

While record bank lending last month and signs of progress in Sino-U.S. trade talks have lifted some of the gloom hanging over Asia’s economic giant, another weak manufacturing reading would suggest it is far from out of the woods yet.

· North Korean leader Kim Jong Un arrived in Vietnam on Tuesday for a summit with U.S. President Donald Trump where they will try to reach an agreement on a North Korean pledge to give up its nuclear weapons program.

Trump is due to arrive in the Vietnamese capital, Hanoi, on Tuesday evening.

They will meet for a brief one-on-one conversation on Wednesday evening, followed by a social dinner, at which they will each be accompanied by two guests and interpreters, White House spokeswoman Sarah Sanders told reporters on Air Force One.

· Indian air force jets carried out air strikes on militant camps inside Pakistan on Tuesday, a government minister said, the first Indian comment on the raids.

“Air Force carried out aerial strike early morning today at terror camps across the LoC (Line of Control) and Completely destroyed it,” minister of state for agriculture Gajendra Singh Shekhawat said on Twitter.

Pakistan’s military said Indian military aircraft had crossed into its territory in the disputed Kashmir region and “released a payload” after Pakistan scrambled its own jets, but there were no casualties or damage.

· Oil inched lower on Tuesday to extend losses of more than 3 percent from the previous session, easing after U.S. President Donald Trump called on OPEC to rein in its efforts to boost prices.

International Brent futures were at $64.70 a barrel at 0728 GMT, down 6 cents, or 0.1 percent, from their last close. Brent, which plunged 3.5 percent on Monday, touched its lowest since Feb. 14 on Tuesday at $64.32 a barrel.

U.S. West Texas Intermediate (WTI) crude futures were at $55.26 per barrel, down 22 cents, or 0.4 percent.