The U.S. dollar index slid 0.70% on Thursday, breaking below its 100-day moving average as narrowing U.S.-Japan yield spreads pushed the yen to a fresh year-to-date high. Soft U.S. data and dovish Fed commentary added to the decline. Fed’s Goolsbee downplayed inflation risks, while St. Louis Fed’s Musalem warned of stagflation risks.

Euro and Pound Extend Gains on Dollar Weakness

EUR/USD surged 0.68%, supported by short-covering ahead of European PMI data and the German elections. Optimism over Ukraine-U.S. investment talks added momentum, with the pair holding above key technical levels. GBP/USD hit a two-month high, rising 0.56%, with traders eyeing U.K. retail sales data for further direction.

Yen Soars as USD/JPY Crashes Below 150.00

USD/JPY plunged 1.15% to 149.40, driven by rate hike expectations from the Bank of Japan and shrinking U.S.-Japan yield differentials. Offshore yuan strength and global equity weakness exacerbated the decline. Traders await Japanese CPI and PMI data for further cues.

Treasury Yields Slip, Equities Decline on Economic Concerns

Yields fell 1-4bps, with the 2s-10s curve flattening to +23.2bps. The S&P 500 dropped 0.7%, weighed down by financials and consumer discretionary stocks, as investors reassessed growth risks.

Commodities Rally as Gold Hits Record High

WTI crude rose 1% on Russian supply fears, while gold climbed 0.2% to a new all-time high on dollar weakness. Copper gained 1.15% as commodities strengthened.

Outlook: Markets Brace for Volatility

Yen crosses saw mixed moves, with EUR/JPY down 0.47%, GBP/JPY off 0.61%, and AUD/JPY slipping 0.30%. Traders remain focused on upcoming economic data and political events, with further dollar downside possible.