U.S. dollar mixed as ECB signals rate cuts, BoJ tightens, and Aussie gains on copper lift
USD/JPY slides, EUR/USD weak near $1.08, AUD/USD rebounds above 0.63
The U.S. dollar posted a mixed performance on Thursday, with the euro hovering near three-week lows, the yen rebounding on safe-haven demand, and the Australian dollar gaining ground as commodity sentiment improved. The market digested multiple macroeconomic signals, including soft Eurozone PMIs, policy divergence between the BoJ and the Fed, and escalating U.S. trade measures.
The euro remained pinned near $1.08 — its weakest since March 6 — as investors reacted to weaker-than-expected services data despite a rebound in manufacturing. ECB policymakers signaled a growing willingness to cut interest rates, with officials Cipollone, Stournaras, and de Galhau all suggesting inflation is slowing faster than expected. ECB President Lagarde also played down inflation risks from possible EU retaliation against U.S. tariffs, reinforcing dovish sentiment.
EUR/USD, USD/JPY & AUDUSD price movement (Source: TradingView)
Yen strengthens on BoJ stance and tariff fears
USD/JPY retreated from mid-150 levels, trading closer to 150.00 on Thursday, as the Japanese yen regained ground following Trump’s announcement of a 25% tariff on all car imports starting April 2. While hopes of Chinese stimulus curbed some safe-haven flows, BoJ Governor Kazuo Ueda reaffirmed plans to tighten policy gradually, citing strong growth and rising wages. Fed policymakers, meanwhile, maintained cautious guidance, with comments from Goolsbee, Kashkari, and Musalem reflecting policy uncertainty and diverging views on inflation.
Technically, the pair remains below key resistance at 151.00, with support levels seen around 149.55 and 149.00. The BoJ Summary of Opinions and Tokyo CPI due Friday could further influence market direction.
Aussie climbs on copper optimism and steady RBA outlook
AUD/USD rose above 0.6300, reversing losses from earlier in the week. President Trump’s tariff threats on copper imports unexpectedly supported the Aussie, given Australia’s role as a major exporter. Additionally, China's proposed stimulus measures lifted commodity currencies broadly.Australia’s February CPI fell to 2.4%, fueling expectations of a rate hold by the RBA next week. However, markets still price in a 66% chance of another rate cut by May. The nine-day EMA at 0.6305 is a key resistance level, while failure to hold above could bring support at 0.6187 back into focus.
In previous analysis, we highlighted how the divergence between central banks—particularly BoJ tightening and Fed's cautious tone — could shape USD/JPY volatility. For EUR/USD, we previously noted that the $1.08–$1.09 zone was critical amid inflation signals. The AUD/USD recovery from multi-week lows aligns with our past outlook on commodity influence and China’s demand narrative.
