The US dollar fell notably on Monday as Treasury yields declined and renewed concerns over stalled U.S.-China trade talks heightened growth fears. Treasury Secretary Scott Bessent emphasized uncertainties around future trade discussions, particularly with China. Weak U.S. data, highlighted by a sharp drop in the Dallas Fed's manufacturing index (-35.8), further weighed on sentiment ahead of key releases later this week.

EUR/USD Gains, But Remains Range-Bound

EUR/USD benefited from dollar softness and favorable EU-U.S. yield spreads, rising 0.47%, yet remained within its established 1.12–1.16 trading range. ECB policymaker Rehn hinted at potential rate cuts amid uncertain growth prospects due to tariff pressures. EUR/CHF eased 0.4% as safe-haven demand rose amid geopolitical tensions.

Sterling Outperforms on Trade Optimism

GBP/USD surged 0.86%, approaching its key 2024 high (1.3434), boosted by strong month-end rebalancing and optimism around UK-U.S. trade discussions. UK retail sales data provided further support, underscoring economic resilience despite global trade concerns. The pivotal resistance at 1.3437 remains closely watched.

Yen Strengthens Sharply on Risk Aversion

USD/JPY declined sharply by 1.10%, driven by safe-haven yen flows ahead of the Bank of Japan’s policy meeting and critical U.S.-Japan trade negotiations. Traders eye key technical supports near 141.96 and 141.68, noting yen strength typically prevails in early May.

Commodity Currencies Steady; Equities Subdued

AUD/USD rose modestly by 0.48%, supported by cautious optimism ahead of Australia's inflation data despite weaker equities. Treasury yields fell 3-7bps; equities retreated slightly, with the S&P 500 down 0.30%. Oil prices dropped sharply (-1.63%) on demand worries, while gold gained 0.90% amid safe-haven buying. Copper held steady.

Currencies at close: EUR/USD +0.47%, USD/JPY -1.10%, GBP/USD +0.86%, AUD/USD +0.48%, Dollar Index -0.49%.