Feb 11 (Reuters) - The dollar traded mixed on Tuesday as Treasury yields firmed following Monday’s announcement of U.S. metal tariffs and Fed Chair Jerome Powell affirmed in Senate testimony that the U.S. central bank is in no rush to cut its short-term interest rate again. Powell said that the economy that is "strong overall," with low unemployment and inflation running above the Fed's 2% target. Cleveland Fed President Beth Hammack said that the need to get inflation back to target will keep monetary policy on pause for now. Investor focus now turns to the January U.S. consumer prices report on Wednesday, with the headline inflation rate estimated steady at 2.9% year-on-year. Rising bond yields kept the yen and Swiss franc trading defensively against their G10 peers, while the euro posted a modest gain as European shares climbed to a record, downplaying tariff fears. Regarding tariffs, European Commission President Ursula von der Leyen said that the 27-nation bloc would take "firm and proportionate countermeasures" though she also reaffirmed the EU's commitment to a fair EU-U.S. trade relationship after meeting with U.S. Vice President JD Vance.
Options show downside risks for EUR/USD are fading ahead of a batch of inflation data this week. But the pair has yet to approach its January high of 1.0532. Nearby resistance is seen at its 21-DMA of 1.0376 and a prior bullish hammer offers support near 1.0250. A report that U.S. Treasury Secretary Bessent will visit Ukraine to discuss rare earth metals sent the Swiss franc reeling on hopes of an eventual Russia-Ukraine ceasefire. Vice President JD Vance is set to meet President Zelenskiy on Friday, Politico reported. EUR/CHF was on pace for its biggest daily gain since August though the cross remains well within its 20-day Bollinger range. GBP/USD rose after topping its 21-DMA of 1.2360 following comments by Bank of England hawk Catherine Mann. She said that her vote for a half percentage-point cut in interest rates last week did not mean she wanted a series of rate cuts. U.K. equity market optimism also helped the pound with the FTSE 100 nearing a record closing high.
USD/JPY posted a modest gain and yen crosses rose as higher yields triggered short-covering. Views on the yen remain mixed with the Bank of Japan in the middle of a tightening cycle. Higher Treasury yields after U.S. CPI would likely trigger another round of USD/JPY short-covering should it breach its nearby 200-day moving average at 152.76. Commodity currencies lagged amid sagging metals prices.
Separately, U.S. President Donald Trump said if all the hostages held in Gaza are not returned by Saturday he would propose canceling the Israel-Hamas ceasefire
Treasury yields were up about 2 to 4 basis points. The 2s-10s curve was up about 2 basis points to +24.0bp.
The S&P 500 rose 0.07% with sectors trading mixed
Oil prices gained 1.3% due to supply concerns linked to sanctions. Gold eased 0.05%, while copper sank 2.46% as investors worried that new U.S. tariffs and a potential global trade war will curb economic growth and metals demand.
Heading toward the close: EUR/USD +0.39%, USD/JPY +0.30%, GBP/USD +0.51%, AUD/USD +0.22%, =USD -0.29%, EUR/JPY +0.69%, GBP/JPY +0.77%, AUD/JPY +0.52%.(Editing by Burton Frierson Reporting by Robert Fullem)
