The U.S. dollar softened slightly Monday as stronger-than-expected Chinese retail sales (+4%) and industrial output (+5.9%) supported risk appetite. Markets shrugged off ongoing tariff concerns as investors awaited key U.S. retail sales and New York Fed data. Treasury yields edged higher, reflecting cautious optimism ahead of this week's Fed policy updates and February inflation indicators.

Euro Gains Limited by Trade Uncertainty

EUR/USD consolidated near recent highs, trading narrowly between 1.0875 and 1.0892. Despite optimism driven by potential German fiscal stimulus and Ukraine ceasefire progress, euro gains were capped below key resistance at 1.0957-1.1000. Geopolitical uncertainties and looming U.S. tariff risks tempered bullish sentiment.

Sterling Steady Ahead of UK Budget Update

GBP/USD remained supported above 1.2900, trading within a tight range as investors awaited clarity from the upcoming U.K. budget update amid reports of potential fiscal shortfalls. Resistance near 1.3046 remains intact, with downside risk at the 21-day moving average (1.2765).

Yen Weakens Slightly Ahead of BOJ Decision

USD/JPY hovered around 149, recovering modestly amid improved risk sentiment and stable Treasury yields. Traders positioned cautiously ahead of this week's Bank of Japan meeting, expecting rates to remain steady with potential signals of future policy shifts. JPY crosses, including EUR/JPY and GBP/JPY, strengthened.

Aussie Gains on China Stimulus Hopes

AUD/USD rose to 0.6343, benefiting from China’s announcement of a domestic consumption stimulus plan, which lifted commodity prices and regional equities. Thursday’s Australian employment data could further influence near-term direction, with resistance near 0.6350.

Commodities Firm as Risk Sentiment Improves

Brent crude advanced 1.03%, buoyed by improved risk appetite, while gold gained 0.36%, reflecting ongoing trade uncertainty. Copper rallied on Chinese stimulus hopes and tighter global supply.

Markets remain cautious, awaiting critical U.S. data and central bank decisions this week, alongside ongoing geopolitical developments.