The US dollar rebounded slightly on Monday after hitting a three-year low, though remained under pressure amid escalating worries about Federal Reserve independence. President Trump's renewed criticism of Fed Chair Powell intensified investor anxiety, while Chicago Fed’s Goolsbee urged caution, noting tariff impacts might be limited. Weak U.S. leading indicators further dampened sentiment.

Euro Hits 3-Year High Amid Thin Trade

EUR/USD surged to a three-year peak at 1.1575, supported by bullish momentum and thin holiday liquidity. The euro remains technically overbought, but bullish dynamics persist with key support at 1.1263. Optimism around potential EU-U.S. regulatory cooperation on gas exports and Ukraine peace talks boosted sentiment further.

Sterling Holds Gains; UK Data Eyed

GBP/USD approached its 2024 high at 1.3434 before trimming gains amid low holiday volumes. Despite overbought signals after a 10-day rally, the pair remains bullish with key supports at 1.3281 and 1.3262. Traders await upcoming UK PMI data and BoE comments for direction.

Yen Gains as Risk Aversion Intensifies

USD/JPY declined sharply, pressured by weak equities and falling energy prices, testing the critical 2024 low at 139.58. Resistance remains firm at 143.13. Investors cautiously await Japan Finance Minister Kato’s U.S. visit and upcoming economic data.

Treasury Yields Mixed, Equities Plunge

U.S. Treasury yields showed mixed moves, but the yield curve steepened notably (+12bps on 2s-10s), reflecting economic uncertainty. Equities sold off sharply, with the S&P 500 down 3.3%, led by broad sector declines.

Commodities Volatile; Gold Hits Record

Oil prices dropped 2.2% on easing geopolitical tensions, while natural gas plunged 6.5%. Gold surged over 3% to a fresh record high amid safe-haven demand, as the dollar weakened significantly.

Currencies at close: EUR/USD +1.12%, USD/JPY -1.05%, GBP/USD +0.63%, AUD/USD +0.62%, Dollar Index -1.07%.