Market sentiment improved after North Korea said on Tuesday it had delayed a decision on a plan to fire missiles at the U.S. Pacific territory of Guam while it watches U.S. actions a little longer.

At the same time, South Korean President Moon Jae-in said there will be no military action upon the Korean peninsula without Seoul's consent and that the government would prevent war by all means.

Market participants were looking ahead to U.S. retail sales data, to be released at 12:30 GMT for further indications on the strength of the economy after disappointing inflation figures on Friday dampened expectations for another rate hike by the Federal Reserve this year.

The USD found some support after New York Fed President William Dudley said on Monday that he favored another interest rate hike this year if the economic conditions evolved in line with his expectations.

The USD index was up 0.27% at 93.58, the highest since August 10.

The GBP dropped to 5-week lows against the USD after data showing that Britain’s annual inflation rate unexpectedly held steady in July underlined the case for the Bank of England to keep interest rates on hold.

Consumer prices rose 2.6% compared with a year earlier, the Office for National Statistics said, slightly below economists' expectations for a 2.7% annual rise. Falling motor fuel prices were offset by higher prices for clothes, utilities and food, the ONS said.

In its latest assessment of the economy released last week, the BoE said it expected inflation to peak at 3% in October.

Elsewhere, German gross domestic product rose 0.6% in the second quarter, Germany’s Federal Statistical Office said, disappointing expectations for an increase of 0.7%. Year-over-year, Germany’s economy grew 0.8% in the last quarter, less than the expected growth rate of 1.9%.

The Statistical Office noted an increase in fixed capital formation in machinery and equipment, in construction and in other fixed assets compared with the first quarter of 2017.

The weak data fueled concerns over the strength of the euro zone’s biggest economy and sent the euro lower.

Oil prices stabilized after falling fresh 3-week lows earlier as a stronger U.S. dollar and concerns over a global supply glut continued to weigh.

Concerns over slowing demand from China, the world’s second-largest oil consumer, pressured prices lower. A report on Monday pointed to a drop in crude demand from Chinese refiners in July.

Oil prices remain vulnerable to bearish sentiment, with traders assessing supply and demand figures to determine how close the oil market is to rebalancing.

The American Petroleum Institute was to release its latest U.S. inventories report later Tuesday, ahead of official storage figures from the U.S. Energy Information Administration on Wednesday.

U.S. crude oil futures were at $47.48, while Brent oil was last at $50.61.

European stocks opened higher on Tuesday, as tensions between the U.S. and North Korea continued to subside, lending support to riskier assets.

Danone SA was one of the top performers on France’s CAC 40, following reports Corvex Management now owns a stake of about $400 million in the company and as rumors surfaced of a possible takeover.

10:00 GMT, the EURO STOXX 50 was up 0.23%, France’s CAC 40 gained 0.44%, while Germany’s DAX 30 added 0.31%.

In the U.S., equity markets pointed to a higher open on Tuesday. The Dow Jones Industrial Average futures pointed to a 0.20% rise, S&P 500 futures signaled a 0.16% gain, while the Nasdaq 100 futures indicated a 0.23% increase.

Merck & Co. was expected to be in focus, after CEO Ken Frazier made headlines on Monday when he resigned from the president's American Manufacturing Council, citing a "responsibility to take a stand against intolerance and extremism."

The move came after President Donald Trump was seen to equivocate about the violent protest by white supremacists in Charlottesville, Virginia, over the weekend that killed a 32-year-old woman and injured 19 other people.