The U.S. dollar traded mixed Wednesday after softer-than-expected inflation data, with nonfarm payrolls rising by just 151,000 versus forecasts of 160,000. Annual CPI eased slightly, prompting markets to trim Fed rate hike expectations. However, trade tensions persisted as Canada unveiled retaliatory tariffs worth nearly $30 billion, escalating concerns over economic impacts.

Euro Dips Amid ECB Caution, Tariff Concerns

EUR/USD slipped 0.2%, consolidating recent gains amid caution from ECB President Lagarde, who highlighted risks from trade disputes and inflation volatility. Resistance near 1.0933 remains firm, though optimism about German fiscal stimulus and potential Ukraine peace talks provided underlying support.

Sterling Advances Modestly on Cautious Optimism

GBP/USD edged 0.2% higher, supported by market views that U.S. tariffs would have minimal impact on the UK economy. Technical indicators remain bullish, with traders focused on a decisive move above key resistance near 1.2950 to signal further upside.

Yen Weakens as Risk Sentiment Improves

USD/JPY rose 0.36%, recovering from recent lows amid improving risk sentiment and firmer Treasury yields. The pair found support from EUR/JPY strength and higher oil prices. Traders look to the 21-day moving average near 150 for near-term guidance.

Commodities Rally on Supply, Geopolitical Risks

Oil jumped over 2% on tight U.S. inventories and escalating geopolitical tensions as Iran dismissed talks on a nuclear deal. Gold rose 0.2%, benefiting from ongoing geopolitical concerns, while copper gained 0.8% amid improving global risk appetite.

Market Outlook: Volatility Ahead

Investors remain cautious ahead of Thursday’s U.S. PPI and jobless claims data, while ongoing geopolitical and trade tensions promise continued market volatility.