The dollar index rose for a fifth session Wednesday as investors sought safety amid fears that President Trump could soon announce tariffs of up to 20% on European auto imports. Renewed trade concerns boosted safe-haven demand, driving Treasury yields higher following upbeat U.S. durable goods data and cautious comments from Fed officials Kashkari and Musalem.

Euro Breaks Key Support

EUR/USD dropped sharply, breaking critical support at 1.0766 after the EU’s chief trade negotiator Maroš Šefčovič warned of imminent U.S. auto tariffs. The break raises risks toward the 200-day moving average at 1.0727, while ECB’s Fabio Panetta called for cautious, data-driven policy, adding pressure on the euro.

Sterling Weakens on Soft Inflation, Budget

GBP/USD fell after weaker-than-expected UK inflation data, undermining the case for Bank of England tightening. Chancellor Rachel Reeves’ budget showed reduced borrowing needs, but sterling stayed heavy, trading just above key support at 1.2873. EUR/GBP steadied, capped by significant options expiry at 0.8465.

Yen Gains Late as Risk Sentiment Falters

USD/JPY initially rose to near 150.75 but retreated as a sharp U.S. equity sell-off boosted the yen’s safe-haven appeal. Resistance remains firm above 151, while a break below 149.55 could trigger a broader decline.

Commodities Firm; Equities Slide

Oil prices rose on inventory drawdowns, copper hit fresh records amid tariff inflation fears, and gold held steady as risk aversion intensified. The S&P 500 dropped 1.3%, led by tech stocks, reflecting renewed trade anxiety.

Market Snapshot

• EUR/USD -0.32%, USD/JPY +0.36%, GBP/USD -0.46%, AUD/USD -0.22%
• Dollar Index +0.31%, Treasury yields +3bps
• S&P 500 -1.3%, Brent crude higher, gold unchanged, copper +0.5%