The U.S. dollar edged higher Wednesday as risk sentiment weakened. Trump floated a 25% tariff on European imports, prompting EU retaliation threats. Treasury Secretary Bessent reaffirmed tax cut plans, while the New York Fed flagged inflation risks from Chinese import tariffs. Markets also eyed weak U.S. consumer confidence and awaited Thursday’s durable goods and GDP data.

Yen Holds Near Lows as USD/JPY Eyes 148.00

USD/JPY traded between 148.76-149.40, hovering near its four-month low. Large $1.9 billion option expiries at 148.00-148.10 provided support, but downside risks remain. EUR/JPY and GBP/JPY also stayed weak, with key support levels in focus.

Euro and Pound Slip as Dollar Gains

EUR/USD dipped 0.1%, trading in a narrow 1.0473-1.0492 range as tariff concerns and a firm dollar kept pressure on the pair. Key support lies at 1.0453, with resistance at 1.0534. GBP/USD eased 0.05% to 1.2661-1.2683, with UK service firms citing deteriorating profits. Resistance is at 1.2787, while support sits at 1.2607.

Aussie Struggles After Weak Capex Data

AUD/USD remained under pressure, trading between 0.6298-0.6314 after Australian Q4 capex data missed expectations. The pair remains in a downtrend, with support at 0.6230 and resistance at 0.6330.

Market Awaits Key U.S. Data Releases

With durable goods, preliminary GDP, and jobless claims data due Thursday, traders remain cautious. U.S. Treasury yields rebounded, with the 10-year yield rising 3bps to 4.277%, adding support to the dollar ahead of potential policy shifts.