The dollar index dipped from a three-week high on Tuesday as U.S. consumer confidence plunged to a four-year low, fueling concerns about economic resilience. Dovish comments from Federal Reserve officials, highlighting stalled disinflation progress, pushed Treasury yields lower and added pressure on the greenback. A potential easing in U.S. tariff plans also dampened dollar demand.

Euro Gains Amid German Data, Ukraine Ceasefire Hopes

EUR/USD firmed slightly, boosted by a strong German IFO business climate reading and cautious optimism around Russia-Ukraine ceasefire discussions. However, dovish ECB remarks from Peter Kazimir and Francois Villeroy de Galhau tempered gains. The pair formed a technical doji, signaling possible bullish continuation if it holds above key support at 1.0766, with resistance at 1.0954.

Sterling Holds Gains Ahead of Key UK Events

GBP/USD remained supported, holding above 1.2901, as markets awaited Wednesday’s UK inflation report and Chancellor Rachel Reeves' fiscal update. Rising gilt yields underpinned the pound, though the critical 1.30 resistance level capped upside. Direction hinges on fiscal announcements and inflation outlook.

Yen Strengthens as USD/JPY Pulls Back from 151

The yen outperformed, driven by falling U.S. yields and seasonal fiscal-year-end demand. USD/JPY declined 0.6%, reversing recent gains after failing at resistance near 151. Further downside below 149.30 could signal deeper yen appreciation.

Australian Dollar Benefits from Commodities Rally

AUD/USD gained modestly (+0.22%), supported by a strong rebound in copper prices amid supply fears linked to potential U.S. metal tariffs. Traders await Australia's February CPI report for fresh inflation cues.

Mixed Market Sentiment Amid Sector Rotation

U.S. equities closed slightly lower, with the S&P 500 down 0.06%. Treasury yields declined 3 basis points, steepening the yield curve slightly. Commodities showed mixed performance: WTI crude fell 0.25%, gold rose 0.22%, and copper surged 2.38%.