April 24 (Reuters) - The dollar index fell alongside Treasury yields on Thursday after Fed officials, while advocating for patience, cautioned about the potential adverse impact of tariffs on growth.
Sentiment remains bearish though favorable rebalancing flows at month-end may see DXY retest the 100 psychological level. Lower yields, positive earnings and optimism that U.S.-China trade tensions would ease helped lift the S&P 500 index over 1%. President Donald Trump refuted Chinese claims that the two countries have not held talks, saying there were meetings earlier in the day. Fed Governor Christopher Waller reiterated his stance that tariffs will push down employment and growth and have a one-time effect on price pressures. Cleveland Fed President Beth Hammack advocated for patience though did not rule out monetary policy changes by June if the data suggested action was needed. In U.S. data, existing home sales fell the most since November 2022 in March, while weekly jobless claims edged up and durable goods orders jumped due to aircraft demand. EUR/USD held gains even after dovish messaging from European Central Bank policymakers Gediminas Simkus, Joachim Nagel, and Ollie Rehn. The ECB's chief economist, Philip Lane, said extraordinary measures are not needed because the bank still has room to cut. The German government reduced its growth forecast on Thursday. A favorable risk bias kept EUR/USD in a narrow 1.1320-1.1395 range, with weakness ahead of the London afternoon fix met by bids at the 1.1350 level.
EUR/USD needs to clear the prior day's high of 1.1440 for upward momentum build, while range support is seen at the April 15 low of 1.1264. EUR/CHF rose for a fourth day, testing its 100-day moving average at 0.9419 before comments Friday by Swiss National Bank chief Martin Schlegel. GBP/USD pared gains after Bank of England Governor Andrew Bailey said he was focused on the tariff shock to growth. Price congestion near 1.3260 lends nearby support while this week's high of 1.3423 is resistance.
U.K. retail sales data is due on Friday. USD/JPY stayed in a narrow range as share gains sent implied volatilities broadly lower. Nikkei reported that Japan is considering buying U.S. soybeans as part of trade negotiations. Focus turns to the April Tokyo CPI reading on Friday.
USD/JPY needs to drop below 141.60 price congestion or rally past a 144 double-bottom to set near-term direction.
Kiwi and Norwegian krone were among the G10 winners.
Treasury yields fell 6 to 9 basis points. The 2s-10s curve was little changed at +51.4bp.
The S&P 500 rose 1.71%, paced by higher tech shares
Oil was up 0.66% due to a favorable risk tone.
Gold rose 1.70% as lower Treasury yields sparked new demand.
Copper edged up 0.54%. Heading toward the close: EUR/USD +0.65%, USD/JPY -0.63%, GBP/USD +0.64%, AUD/USD +0.74%, DXY -0.56%, EUR/JPY +0.04%, GBP/JPY +0.01%, AUD/JPY +0.13%.(Editing by Burton Frierson Reporting by Robert Fullem)
