The U.S. dollar stabilized slightly Thursday after hitting recent lows, supported by cautious positioning ahead of Friday’s U.S. jobs report. Investor anxiety rose amid persistent U.S. trade tensions, slowing domestic growth signals, and AI-driven uncertainties. Treasury yields climbed modestly, with the curve steepening by roughly 2bps, reflecting cautious sentiment.

Euro Pulls Back as ECB Outlook Weighs

EUR/USD declined after the ECB delivered cautious commentary, signaling possible rate cuts ahead despite Europe’s fiscal stimulus plans. ECB caution around inflation and trade uncertainties limited euro optimism. Technical indicators suggest short-term bearish momentum, though bullish option positioning could limit extended downside.

Sterling Holds Gains Near Technical Resistance

GBP/USD held near key resistance around 1.30, buoyed by a resilient U.K. economic outlook despite global uncertainty. Bank of England Deputy Governor Ramsden downplayed wage-driven inflation risks, but caution remains ahead of next week’s U.K. data and lingering geopolitical volatility.

Yen Strengthens as Market Sentiment Sours

USD/JPY declined toward 150, marking fresh year-to-date lows, driven by renewed safe-haven demand and corporate hedging. Equity market weakness, notably in consumer discretionary and technology sectors, supported yen strength, alongside options-driven bearish positioning ahead of anticipated Bank of Japan signals.

Commodities Mixed Amid Risk Aversion

Oil prices slumped more than 3% on rising U.S. inventories, reaching a three-year low, while gold gained slightly on safe-haven buying. Copper surged sharply on optimism over China's new stimulus measures, highlighting mixed commodity-market sentiment.

Market Outlook: Volatility Ahead of Key U.S. Data

Markets remain cautious, closely watching Friday’s U.S. nonfarm payrolls and unemployment data, as geopolitical tensions and tariff uncertainty continue driving volatility.