The dollar gained strongly on Friday after U.S. import prices rose modestly (0.1%) and consumer inflation expectations surged notably to 7.3%, lifting short-term Treasury yields. Investor focus now shifts to persistent inflation pressures influencing Fed policy decisions.

Trade Optimism Supports Risk Appetite

Equities advanced as President Trump announced upcoming trade negotiation conditions, and the Financial Times reported meaningful progress in U.S.-EU trade talks. Further optimism arose from Trump's remarks that Iran is seeking to reinitiate trade discussions with the U.S.

ECB Maintains Cautious Tone Amid Uncertainty

ECB policymakers emphasized caution as Martins Kazaks indicated eurozone rates may be near their lower bound, while Philip Lane expressed reservations about introducing alternative economic scenarios due to potential confusion.

EUR/USD Weakens; Sterling Holds Near Key Level

EUR/USD weakened amid broad dollar strength and weekend positioning, testing technical support around 1.1097. The Swiss franc softened after SNB Chairman Schlegel signaled potential negative rate continuation. GBP/USD hovered cautiously near the pivotal 1.33 level, with downside risk below 1.3079.

USD/JPY Gains Ground Amid Improved Sentiment

USD/JPY reversed earlier losses, closing firmly above key technical support at 145.50, suggesting potential further upside toward Ichimoku cloud resistance at 146.45.

Commodities Mixed on Trade Developments

Oil prices rose about 1.3%, buoyed by eased U.S.-China tensions and UAE investment plans in U.S. energy. Gold declined sharply (-1.37%) amid reduced safe-haven demand, and copper dropped nearly 2% due to a stronger dollar.

Market Snapshot:

• EUR/USD down 0.34%
• USD/JPY up 0.2%
• GBP/USD slipped 0.23%
• AUD/USD nearly unchanged
• S&P 500 rose 0.59%
• Dollar index broadly higher