The euro retreated against the dollar Thursday following the European Central Bank’s anticipated interest rate cut. ECB policymakers warned of economic damage from U.S. tariffs, increasing expectations for further monetary easing. EUR/USD slipped to around 1.1336, facing potential deeper declines if key supports at 1.1241 and 1.1213 break, though upside barriers near 1.15 remain relevant.

Trump’s Comments Stir Monetary Policy Concerns

President Trump renewed criticism of Fed Chair Jerome Powell, suggesting a desire for leadership change, intensifying uncertainty around U.S. monetary policy. New York Fed President John Williams highlighted no immediate policy shift but noted inflation risks from tariffs. IMF’s Georgieva reassured markets that, despite trade tensions, a global recession remains unlikely.

Sterling Steady Ahead of Key Data

GBP/USD traded slightly higher in a tight pre-Easter range, consolidating near psychological support at 1.32, with resistance at the YTD high of 1.3292. Upcoming UK flash PMIs and Bank of England statements next week will be crucial, especially after soft inflation figures reinforced expectations of a May rate cut.

Yen Supported by Rising Yields and Oil

USD/JPY edged modestly upward, supported by higher Treasury yields, rising oil prices, and cautious trade optimism following Trump’s positive comments on talks with Japan. However, recent lower highs limit upward momentum, with resistance near 144.55 and key support at 141.60 ahead of Japan’s CPI release.

Markets Recalibrate Amid Volatility

Treasury yields rose up to 6 basis points as the yield curve steepened slightly. Equities posted modest gains, with the S&P 500 up 0.25% on low volume. Commodities were volatile: oil surged over 3.25% on trade optimism, while gold (-0.90%) and copper (-1.5%) declined, reflecting mixed investor sentiment amid shifting geopolitical developments.