The dollar recovered notably on Friday, bouncing from a three-year low as investors downplayed China's tariff increase to 125% on U.S. imports. Stronger-than-expected bank earnings boosted equities, while Treasury yields firmed following Fed officials' hawkish comments. New York Fed’s Williams dismissed stagflation fears, stressing inflation vigilance, and Minneapolis Fed’s Kashkari urged policy caution.

White House Calms Trade Concerns

The White House announced active negotiations on over 15 trade agreements, aiming to stabilize investor confidence. Treasury Secretary's monitoring of bond markets also provided reassurance amid recent volatility.

Euro Surges to Fresh High; ECB Ready to Act

EUR/USD rallied sharply over 1%, reaching a three-year peak at 1.1474 before easing slightly. ECB President Lagarde reaffirmed readiness to ensure financial stability ahead of pivotal EU-U.S. trade talks scheduled for Monday, aiming to ease tensions.

Sterling Volatile Amid Growth Optimism

GBP/USD tested critical resistance near 1.3207 following positive UK February GDP data and FTSE index gains. However, gilt yields slipped amid ongoing caution. A break above resistance could spur further upside, but a retreat below the 200-DMA at 1.2815 remains bearish.

Yen Recovers From Six-Month Lows

USD/JPY rebounded from a low of 142.05, benefiting from improved risk sentiment. Nonetheless, bearish sentiment remains strong amid U.S. scrutiny of Japan’s currency policy ahead of trade negotiations, risking further yen strength.

Commodities Rally, Supporting AUD and NZD

AUD and NZD outperformed amid higher commodity prices and a firmer Chinese yuan. Oil jumped 2.5% as the U.S. hinted at halting Iranian exports. Gold rose 1.8% to record highs, while copper surged 4.3%, reflecting stronger industrial demand outlook.

Equities and Yields Advance

The S&P 500 gained 1.8%, led by materials and energy stocks. Treasury yields rose 2-10 basis points, flattening slightly, reflecting balanced growth and inflation expectations. The dollar index closed up 0.81%, signaling a measured sentiment recovery after intense volatility.