The dollar was mixed on Wednesday, as higher Treasury yields and oil prices amid renewed verbal threats between the U.S. and Iran weighed on haven currencies, while DAX gains and cross-related flows underpinned the euro. A dearth of U.S. data kept the focus on geopolitics, with equity markets mixed as investors prepared for second-quarter results from Alphabet GOOGL.O and Tesla TSLA.O, the first "Magnificent Seven" megacap companies to report after the bell for fresh evidence that these companies' multibillion-dollar investments in AI are paying off. President Donald Trump warned the U.S. would strike Iranian infrastructure if Iran attacked shipping in the Strait of Hormuz, while Tehran vowed to target U.S.-linked regional infrastructure in response. Trump envoys Steve Witkoff and Jared Kushner discussed diplomacy with Ukraine President Volodymyr Zelenskiy, who described the talks as constructive. Germany will launch a state-backed fund to invest directly in defense startups. U.S. Trade Representative Jamieson Greer hopes to reach interim trade deals with Mexico and Canada this year ahead of broader USMCA changes in 2027.
The Norwegian krone topped G10 gains, while the Swiss franc lagged. DXY vols stayed near YTD lows amid subdued turnover, though yen vols firmed on intervention fears and Bank of Japan policy uncertainty. EUR/USD edged higher on risk-friendly flows and EUR/JPY strength, but the broader technical outlook remains bearish while below its 10- and 21-DMAs near 1.1412-20.
EUR/CHF notched a third consecutive gain to its highest since late January, with the move supported by bullish momentum above its upper Bollinger. GBP/USD was under pressure after a fifth straight session of lower highs and lows, with rising oil prices, U.K. fiscal concerns and elevated gilt yields keeping the bias bearish below 1.34. AUD/USD remained constructive above key moving averages despite USD strength, with dip-buying and rising risk assets helping preserve the broader bullish bias. USD/JPY remained bullish above 163, supported by higher yields and improving momentum, though intervention risks were increasing as a BOJ meeting approaches.
Treasury yields were up 1 to 4 basis points as the curve flattened. The 2s-10s curve was down about 1 basis point to +35.0bp.
The S&P 500 was flat in mixed market.
WTI oil rose over 3% to a six-week high.
Gold rose 1.5% while copper fell 0.9% as the CNH weakened.
Heading toward the close: EUR/USD +0.11%, USD/JPY -0.04%, GBP/USD -0.01%, AUD/USD -0.05%, DXY -0.05%, EUR/JPY +0.10%, GBP/JPY -0.01%, AUD/JPY -0.07%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)
