The U.S. dollar traded mixed on Monday as persistent trade tensions kept investors cautious. White House adviser Hassett’s reassurance failed to soothe markets unsettled by Trump's tariff threats and a worsening tech selloff. Treasury yields dropped, and the 2s-10s curve steepened to +25.3bps, reflecting uncertainty despite reassurances on U.S. GDP growth.

Euro Rally Stalls Amid Cautious Sentiment

EUR/USD struggled near a key resistance at 1.0937, forming a bearish doji as investor enthusiasm faded despite positive European sentiment data. The euro’s upside was limited by lingering tariff threats and uncertainty around upcoming ECB actions, with key support at its 200-day moving average (1.0722).

Sterling Weakens on Cooling UK Data

GBP/USD slipped as UK labor data showed signs of cooling, pushing gilt yields lower and capping sterling gains near 1.2950. Speculative market positioning remains modest, limiting momentum as traders cautiously await further economic clarity from upcoming UK PMI figures.

Yen Strengthens Amid Safe-Haven Demand

USD/JPY slid toward a five-month low at 146.94, pressured by falling Treasury yields and a steep tech-driven selloff in equities, with the S&P 500 down over 2.5%. Yen crosses weakened notably, reflecting widespread risk-off sentiment. Traders now await Japan’s Q4 GDP data and bilateral trade discussions for further direction.

Commodities Retreat as Growth Fears Rise

Oil prices fell 1.5% due to tariff and oversupply worries, while gold dipped slightly despite risk-off sentiment. Copper also declined on fears surrounding Chinese demand and ongoing U.S. tariff uncertainties.

Markets Brace for Further Volatility

The dollar index rose 0.25% on safe-haven flows, while risk-sensitive pairs such as AUD/USD (-0.32%) and AUD/JPY (-0.90%) suffered. Markets remain wary ahead of critical trade developments, central bank meetings, and economic data releases this week.