US Dollar Strengthens on Inflation Data and Fed Outlook

The US Dollar saw broad-based gains against major currencies, supported by higher-than-expected US Consumer Price Index (CPI) data and a resulting climb in Treasury yields. This data reinforced market expectations that the Federal Reserve may remain cautious, which in turn weighed on currencies including the Euro, Japanese Yen, and New Zealand Dollar. Traders are also looking ahead to upcoming US Producer Price Index (PPI) data and high-level US-China trade talks for further market direction.

Euro Weakens on Disappointing Data Despite Hawkish ECB Signals

The Euro lost ground after Eurozone industrial production figures for March rose less than anticipated, compounding concerns over the region's economic health. Despite the soft data, economists widely expect the European Central Bank (ECB) to proceed with an interest rate hike in June to address persistent inflation. ECB policymakers noted that monetary policy decisions should not be based on oil prices alone, but also highlighted the need for a quick resolution to Middle East tensions to avoid further economic shocks.

Oil Markets Focus on Supply Risks and Geopolitics

Oil prices remained a key focus for markets, with analysts citing rising Middle East risk, particularly regarding potential disruptions to supply through the Strait of Hormuz. The International Energy Agency (IEA) projected a significant drop in world oil supply in 2026, assuming a gradual resumption of flows through the critical waterway. These supply concerns have contributed to elevated oil prices, putting pressure on currencies of energy-importing nations.

Precious Metals Face Headwinds from Strong Dollar and Policy Changes

Gold and silver prices were under pressure, with reports indicating declines for both metals during trading sessions. This weakness occurred amid a strengthening US Dollar and rising bond yields, which typically present headwinds for non-yielding assets. Separately, the Indian government increased its import duty on both gold and silver to 15%, a significant policy change for a major consumer market.