The USD index headed toward the close down 0.14% on Thursday, having rallied off session lows immediately after the ECB delivered a 50bp rate hike, which markets greeted with a mixed response due to recent global banking sector turmoil.

In its decision, the ECB appeared to look past the financial volatility, remaining focused on persistently high euro zone inflation.

Despite the hike, President Christine Lagarde said the ECB could act fast to mitigate any crisis if financial conditions worsened.

EUR/USD traders initially interpreted ECB comments as dovish and pushed EUR/USD to session lows 1.0552.

Later, rate markets, reacting to reports of a potential deal to support First Republic bank, boosted yields across the board and lifted EUR/USD near 1.06 near the NorAm close.

USD/JPY fell to a March low at 131.72 after the ECB hike as traders remained convinced that other central banks would eventually have to reverse their tightening, which would event the playing field for the low-yielding yen.

Rising global yield pulled USD/JPY dramatically higher, with USD/JPY gains completely reversed as the pair rallied to 133.63 up 0.12% on the day.

GBP/USD was up 0.44% at 1.2108, rising off early NorAm lows by 1.2029, just above its rising 10-DMA at 1.2020.

Despite several dips below multiple DMA below 1.2050 and ahead of 1.20, the failure of GBP bears to break below support hints that bulls may target topside resistance by the daily cloud base at 1.2145 as traders ramp up BoE hike expectations after the ECB’s 50bp move.

Oil gained nearly 2% as the perceived reduction in financial risk lifted global growth aspirations.
Copper also moved up by 0.66%.
Gold held steady by $1,917 as traders await further financial developments.

Cryptocurrencies Bitcoin and Ether moved up slightly on the reduced risk outlook, BTC gaining 1.46% and ETH +0.4%.
BTC’s recent high by $26.5 is likely to cap price global yields sustain any sort of recovery.

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