The dollar weakened sharply on Thursday, pressured by declining Treasury yields after U.S. producer prices fell in April and retail sales disappointed. The 2-year Treasury yield dipped below 4%, reflecting investor bets on more accommodative Fed policy, especially after Chair Jerome Powell urged a cautious reassessment of inflation and employment conditions. Equities rose, with the S&P 500 hitting two-month highs ahead of Friday’s key consumer sentiment release.

Global Sentiment Mixed Amid Trade and Geopolitical Uncertainty

Oil prices fell 2.2% amid speculation of a U.S.-Iran nuclear agreement potentially boosting crude supplies. Walmart warned it would soon pass tariff-driven costs onto consumers. Tensions rose between the U.S. and Mexico over proposed taxes on remittances, though Mexico’s central bank still cut rates from 9% to 8.5%, signaling cautious inflation optimism.

EUR/USD Holds Steady; EUR/CHF Weakens

EUR/USD was little changed after earlier gains driven by soft U.S. data. The pair remained technically supported near 1.1147, bolstered by bullish technical signals and options sentiment. EUR/CHF, however, dropped 0.6% after stronger-than-expected Swiss economic data highlighted regional divergences.

Sterling Firms on Positive UK GDP Data

GBP/USD edged higher near 1.33, supported by robust UK GDP growth of 0.2% in March. Bullish options positioning in sterling remained strong, underpinning cautious optimism despite broader market uncertainties.

USD/JPY Falls Amid Lower Yields and Oil Prices

USD/JPY declined for a third consecutive session, pressured by lower U.S. yields and softer oil prices. Key technical support around 145.35 is in focus, with resistance seen in the Ichimoku cloud region at 147.42-149.95 ahead of critical Japanese GDP data due Friday.

Commodities Gain on Weaker Dollar

Gold prices rose 1.39%, and copper advanced nearly 0.9%, benefiting from a softer dollar and cautious optimism about global economic conditions.

Market Snapshot:

• EUR/USD flat
• GBP/USD moderately higher
• USD/JPY lower for third day
• Gold and copper prices stronger
• Dollar index notably weaker