Haven currencies retreated Wednesday as market fears eased ahead of President Trump's reciprocal tariff announcement scheduled for 4:00 p.m. EDT. Reports suggested greater policy flexibility, improving risk sentiment. Mexico and the UK signaled restraint in responses, further reducing risk aversion, though tariffs on autos and Chinese goods remain likely from April 3.

Strong US Data Boosts Treasury Yields

The ADP employment report showed private payrolls rose by 155,000 in March, exceeding forecasts, while factory orders grew by 0.6% in February, supporting economic optimism. U.S. Treasury yields climbed 5–6 basis points, though the 2s–10s curve remained stable at +28.4bp.

Euro Gains on Short-Covering, Diplomatic Optimism

EUR/USD surged 0.60% amid strong demand for euro calls, pushing one-week risk reversals sharply higher. ECB President Lagarde cautioned tariff impacts hinge on duration and severity, while ECB’s Holzmann hinted unconventional policies may follow deeper trade conflicts. Additionally, optimism surrounding potential Ukraine peace talks lifted sentiment. EUR/USD faces key resistance near 1.0950/60; support remains at the 200-DMA (1.0730).

Sterling Advances, Eyes Key Technical Levels

GBP/USD rose 0.46%, supported by optimism that the UK may avoid severe US tariffs due to its trade deficit. Key technical boundaries are the 200-DMA at 1.2808 (support) and psychological resistance at 1.3000. Upcoming UK PMI data and tariff announcements remain pivotal.

Yen Weakens as Risk Appetite Returns

USD/JPY climbed to 150.25, driven by rising U.S. yields and cross-related demand. Near-term resistance is clustered near 151.18–151.75, with critical support at 148.00.

Commodities, Equities Rally on Risk-On Mood

The S&P 500 gained 0.36%, driven by consumer discretionary stocks. Oil prices rose 0.83%, gold edged up 0.36%, and copper firmed slightly (+0.10%) amid tariff speculation. The dollar index declined by 0.39%, with commodity-linked currencies strengthening notably.