March 31 (Reuters) - The dollar index rose with oil on the final trading day of March, while U.S. equity prices turned mixed as recession fears ebbed. Over the weekend, Goldman Sachs raised the likelihood of a U.S. recession from 20% to 35% and projected additional rate cuts by the Federal Reserve. A 3% surge in oil after President Donald Trump threatened Russian tariffs and stronger-than-anticipated Chicago PMI supported the recovery of Treasury yields from earlier declines. Attention turns to the ISM report for March and February's job openings data on Tuesday.
EUR/USD fell by 0.1% due partly to rebalancing flows, while rising bund yields provided some support. Fabio Panetta, a member of the European Central Bank's governing council, suggested that the central bank might need to proceed cautiously with interest rate reductions, reflecting recent reports that policymakers are becoming more hesitant to cut.
Currently, there is an approximately 80% chance of an ECB rate cut on April 17. Additionally, ECB President Christine Lagarde emphasized the negative growth implications of proposed U.S. tariffs and potential for policy devergeance.
EUR/USD is holding above its 200-day moving average of 1.0727, with short-term risk reversals favoring its upside. GBP/USD eased as declining U.K. share prices reduced interest in the risk-sensitive pound. While CFTC data shows net cable longs at the highest level since November, the pair is struggling to regain the 1.30 level due to uncertainty surrounding the U.K.'s growth prospects.
Nonetheless, the pound is perceived as less susceptible to potential U.S. reciprocal tariffs if announced this week. Megan Greene, a hawkish external member of the Bank of England's Monetary Policy Committee, is scheduled to speak on Tuesday. USD/JPY rebounded from earlier losses, climbing above 150 due to stronger Treasury yields, higher oil, and weakness in Asian currencies. The pair dipped briefly following a report from Chinese state broadcaster CCTV that China, Japan, and South Korea would collaborate to address U.S. tariffs.
Further USD/JPY gains are possible if rising commodity prices lead to additional short-covering. Although forming a hammer, it must surpass the March high of 151.30 to become distinctly bullish, while a close below 149 would suggest bears are retaking control. Attention is now shifting to the upcoming Q1 Tankan report.
AUD/USD is at a near one-month low on metal weakness ahead of a Reserve Bank of Australia decision on Tuesday. The central bank is seen leaving its policy rate unchanged at 4.1%.
Treasury yields were mixed as the curve flattened. The 2s-10s curve was down about 1 basis point to +33.8bp.
The S&P 500 rose 0.12% with most sectors advancing.
Oil jumped over 3% to a five-week high on supply concerns.
Gold rose 1.22%, setting a record due to tariff uncertainty.
Copper fell 1.57% on worries about U.S. tariffs though losses were cushioned by strong China factory data.
Heading toward the close: EUR/USD -0.13%, USD/JPY +0.20%, GBP/USD -0.15%, AUD/USD -0.62%, =USD +0.20%, EUR/JPY +0.10%, GBP/JPY -0.04%, AUD/JPY -0.39%.(Editing by Burton Frierson Reporting by Robert Fullem)
