With U.S. markets closed across the Atlantic for Independence Day celebrations, the dollar edged higher, rising to a seven-week high. The yield on the two-year Treasury note climbed to levels not reached since 2008 on Monday ahead of the national holiday. EUR/USD slipped a quarter percent to 1.1334.

North Korea launched a missile on Tuesday, with officials saying it may have landed within Japan's exclusive economic zone. Pyongyang again tested fraught international relations after it launched a ballistic missile into the sea off its east coast. Japanese Prime Minister Shinzo Abe condemned the attack and called on Chinese and Russian leaders to do more to deal with North Korea's weapons program.

Chinese President Xi Jinping is met with Russian President Vladimir Putin Tuesday for strategic talks before traveling to Berlin to prepare for G-20 talks later this week. Moscow and Beijing have agreed that North Korea should freeze its nuclear and missile programs.

Elsewhere, France's Prime Minister Edouard Philippe is to present his government to a confidence vote. This comes after President Emmanuel Macron laid out his plans for parliamentary reforms Monday, in which he threatened to revert to a public referendum if lawmakers did not move quickly enough to back his plans.

European bourses closed in red on Tuesday as geopolitical concerns weighed on risk sentiment. USD/JPY retreated to 112.72 at one point but held its ground above 113.