The dollar was mixed on Friday, trimming recent gains against some currencies but edging higher versus others as easing oil prices and lower Treasury yields prompted some pre-weekend profit-taking in a low-turnover session. Pakistan and Iran are exploring a path to renewed talks with the U.S. in a China-backed diplomatic initiative.
Weekend risks are heightened after U.S. President Donald Trump said earlier this week he is close to deciding on a "massive attack" against Iran. Trump said Friday that he does not believe China or Russia are involved in the Iran conflict, warning any involvement would be "very bad" for them. Trump criticized the EU's fines on Google, saying the U.S. would investigate what he called unfair targeting of American firms. ECB chief economist Philip Lane said the inflation shock remains moderate, requiring only limited policy action, with inflation expected to return to 2% within about a year.
The dollar index retreated from its 20-day upper Bollinger, suggesting a low-turnover, range-trading environment remains intact even as Middle East tensions build. EUR/USD remained biased lower, with an inverted hammer and position below 1.14 and its 21-day moving average of 1.1414 reinforcing a bearish outlook despite intermittent USD softness. GBP/USD stayed pressured below its 21-day moving average and near recent lows around 1.3300, with a broadly balanced Fed-BoE rate outlook and lingering geopolitical uncertainty limiting its upside. AUD/USD rose and remains biased higher, supported by a softer USD and strong commodity prices, with the pair consolidating gains above its 10-, 21- and 200-DMAs beneath the 0.70 level. USD/JPY remains constructive above 163 and a rising 21-DMA, though option barriers, intervention risks and geopolitical uncertainty may keep gains choppy, leaving the pair vulnerable to a pullback.
Treasury yields were down 1 to 3 basis points as the curve steepened. The 2s-10s curve was up marginally at +35.1bp.
The S&P 500 was flat as tech weakness was offset by other sectors.
WTI oil fell over 3% on profit-taking and the report of a fresh U.S.-Iran peace initiative.
Gold rose 0.20% while copper edged up 0.15% Heading toward the close: EUR/USD -0.07%, USD/JPY -0.01%, GBP/USD +0.09%, AUD/USD +0.20%, DXY +0.02%, EUR/JPY -0.08%, GBP/JPY +0.06%, AUD/JPY +0.18%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)
