The U.S. dollar rose on Wednesday as renewed trade tariff threats from Trump and escalating tensions over Ukraine peace talks fueled risk aversion. Trump’s remarks on Zelenskiy further clouded diplomatic efforts, boosting demand for the greenback. Rising energy prices, with natural gas hitting a 14-month high, reinforced inflation concerns and Fed policy caution.

Treasury Yields Hold Steady Ahead of Fed Minutes

Treasury yields were little changed, with investors awaiting the Fed’s January meeting minutes and speeches from Fed officials on Thursday. The 2s-10s curve steepened slightly to +26.2bps, reflecting modest rate expectations adjustments.

Euro and Pound Retreat Amid Bearish Signals

EUR/USD fell for a third day but found some support from rising European yields and defense spending expectations. GBP/USD briefly hit a two-month high after strong UK inflation data but faced resistance near 1.2659. Technical indicators suggest limited upside momentum for both pairs.

Yen and Aussie Dollar Weaken as Risk Sentiment Wavers

USD/JPY tested 151.20 support before paring losses amid weaker equities and subdued implied volatility. AUD/USD edged lower ahead of Australia’s employment report and an RBA speech that may influence rate expectations.

Commodities Mixed as Oil Holds Gains, Gold Slips

WTI crude remained near one-week highs on supply concerns, while natural gas extended its rally. Gold fell 0.38%, pressured by a stronger dollar that dampened its inflation hedge appeal.

Markets Brace for Key Economic Events

As the session ended, the dollar index firmed 0.18%, with EUR/USD down 0.21%, GBP/USD off 0.28%, and USD/JPY declining 0.38%. Risk-sensitive yen crosses weakened as uncertainty kept investors defensive ahead of key data releases and central bank commentary.