April 22 (Reuters) - The dollar index climbed on Tuesday and U.S. stocks gained ground as fears of an intensifying U.S. trade war eased, while investors also digested another round first-quarter earnings ahead of Telsa results. DXY gains to 99.222 would fill a down gap left over the weekend. Shares received an added boost after U.S. Treasury Secretary Scott Bessent said he believes there will be a de-escalation in U.S.-China trade tensions though future negotiations will be a "slog" that has not started yet. Various reports suggested modest progress in U.S. trade discussions including a possible outline of future negotiations with India. The White House said U.S. officials are meeting this week with 34 countries to discuss trade. The Treasury yield curve reversed some of Monday's steepening. Two-year yields held gains following a soft auction. The International Monetary Fund slashed its growth forecasts for the United States, China and most countries, citing the impact of U.S. tariffs and trade tensions. EUR/USD fell 0.78% due to position squaring and monthly hedging. The drop slowed ahead of the 5-day moving average at 1.1419 with a series of higher lows keeping bulls optimistic. The April 15 low of 1.1263 is support on a further pull back. European Central Bank President Christine Lagarde said an EU-U.S. trade deal is possible though needed "serious" and "tedious" negotiations on some sectors. ECB policymaker Peter Kazimir said the bank's 2% inflation target may be reached in the coming few months but an uncertain outlook limits guidance. EUR/CHF rose 0.5% amid share gains. GBP/USD eased 0.3% due to broad dollar gains and hedging activity following the holiday break. The drop marks an end to a 10-day winning streak for cable. Further profit-taking can be expected if it slips below Monday's low of 1.3266. Britain is more likely to see lower than higher inflation as a result of U.S. President Donald Trump's tariffs, Bank of England policymaker Megan Greene said.
BOE Governor Andrew Bailey is slated to speak on Wednesday. USD/JPY rebounded from its lowest level since September as shares advanced. The U.S. and Japan are moving closer to a cursory interim arrangement on trade, according to a person familiar with the matter. The oversold recovery is likely to test the 141.62-64 April 16 and April 17 low. Futures suggest that shorts are also at risk should spot move above the April 11 low of 142.05.
JibunBK PMIs will be released during Tokyo hours.
Treasury yields were mixed as the curve flattened. The 2s-10s curve was down about 7 basis points to +64.6bp.
The S&P 500 jumped 2.07% with financials leading sector gainers.
Oil rose 1.78% due to new Iran sanctions and equities rally.
Gold fell 1.28% on profit-taking while copper gained 3.28%.
Heading toward the close: EUR/USD -0.79%, USD/JPY +0.47%, GBP/USD -0.33%, AUD/USD -0.69%, DXY +0.68%, EUR/JPY -0.30%, GBP/JPY +0.16%, AUD/JPY -0.22%.(Editing by Burton Frierson Reporting by Robert Fullem)
