The U.S. dollar posted its largest daily gain this year on Thursday, boosted by Trump’s tariff announcement targeting Canada, Mexico, and China. Safe-haven demand and month-end rebalancing further supported the greenback, alongside hawkish Fed remarks. Kansas City Fed’s Schmid and Cleveland Fed’s Hammack emphasized vigilance on inflation.

U.S. Economic Weakness Moderates Gains

Despite dollar strength, soft U.S. data tempered momentum. Initial jobless claims rose sharply, pending home sales fell 4.6%, and the Kansas City Fed manufacturing index hit a five-month low. Treasury yields pared earlier gains, with the 2s-10s curve steepening modestly to +20bps. Markets await Friday’s PCE inflation data for Fed policy clues.

Euro Drops on ECB Rate Cut Fears and Tariff Concerns

EUR/USD declined 0.7%, breaking below its 21-day moving average toward strong support at 1.04, pressured by impending EUR2.3 billion options expiries. Concerns over EU tariffs and ECB easing next week amplified downside risks. EUR/CHF fell sharply, reflecting broader risk aversion amid weakening European growth.

Sterling Softens Within Narrow Range

GBP/USD slipped 0.5%, cushioned slightly by EUR/GBP weakness. The pair remains range-bound between 1.2541 and 1.2717, with seasonal factors suggesting further downside risks into late March.

USD/JPY Tests Key Resistance as Yen Crosses Weaken

USD/JPY advanced, approaching resistance near 150. Cross-related selling and caution ahead of Tokyo CPI limited gains. AUD/JPY hit multi-month lows amid broader risk-off sentiment.

Oil Surges on Venezuela Sanction; Gold Falls

WTI crude surged 2.6% after Trump revoked Chevron’s Venezuela license, while gold declined 1.0% due to dollar strength. Copper bucked the trend, rising 0.8%.

Markets remain volatile as tariff developments and key economic data shape sentiment.