The dollar pared initial losses on Monday, supported by rising Treasury yields after April's U.S. ISM services PMI unexpectedly climbed to 51.6 from 50.8 in March, with prices-paid hitting a two-year high. Treasury Secretary Scott Bessent also boosted sentiment, asserting that the administration’s tariff, deregulation, and tax-cut agenda could drive growth toward 3% despite short-term volatility from trade tensions.

EUR/USD Holds Steady; Political Risks Loom

EUR/USD remained range-bound, consolidating above its 21-day moving average (1.1294). Investor sentiment was cautiously optimistic, with euro call options gaining interest. However, upcoming Romanian elections featuring eurosceptic candidate George Simion may inject volatility into euro sentiment later this month.

Sterling Edges Higher Ahead of BoE Decision

GBP/USD edged modestly higher as investors cautiously awaited Thursday's Bank of England meeting, widely expected to deliver a 25bp rate cut. Traders will closely watch the BoE’s assessment of tariff-related risks to the U.K. economy. Sterling remained contained below key resistance, needing either a weaker dollar or hawkish central bank signals to break higher.

USD/JPY Stabilizes Amid Firmer Yields

USD/JPY initially weakened but trimmed losses as firmer U.S. yields provided support, holding near key technical levels (21-DMA at 143.65). However, strong resistance remains at the Ichimoku baseline (145.19), limiting short-term upside potential.

Commodities Mixed; Gold Surges

Oil prices fell nearly 2% after OPEC+ accelerated output hikes, reflecting lingering demand concerns. Gold surged 2.6%, benefiting from dollar softness and safe-haven demand, while copper gained modestly (+0.48%) amid cautious optimism about U.S.-China trade developments.

Currencies at close: EUR/USD +0.21%, USD/JPY -0.77%, GBP/USD +0.18%, AUD/USD +0.43%; Dollar Index down approximately 0.25%.