[MARKET ANALYSIS] DXY pauses after strengthening yesterday on better-than-expected data, higher yields, rising oil prices and mixed FOMC views

DXY: Flat

• Dollar paused overnight and held on to recent spoils after advancing yesterday as US yields rose following better-than-expected data and as oil prices surged after sources noted the Trump admin is closer to a major war with Iran than people realise. Focus was also on the FOMC Minutes, which largely encapsulated the statement in the January meeting and ultimately showed a divided rate outlook as several stated that further rate cuts would likely be appropriate if inflation declines as expected, and some judged rates should be held steady for some time pending clearer disinflation evidence, while several favoured two-sided guidance, noting that upward adjustments could be appropriate if inflation remains above target.

EUR/USD: +0.1%

• Attempts to nurse some losses after slipping beneath the 1.1800 level as the buck strengthened, and with the single currency not helped by conflicting reports about ECB President Lagarde's future.

GBP/USD: Flat

• Languishes at this month's low just beneath the 1.3500 handle owing to the firmer dollar and after UK CPI slowed.

USD/JPY: +0.1%

• Tests the 155.00 level to upside after coat-tailing on the dollar advances and higher US yields post-data.

Antipodeans: AUD/USD +0.4% / NZD/USD +0.2%

• Mildly benefitted from the positive risk appetite with AUD/USD supported following the mixed jobs data which showed headline employment change slightly missed expectations, although the unemployment rate printed lower than expected, and the increase in jobs was solely fuelled by full-time work.

The DXY's recent pause after a strengthening session highlights a moment of consolidation amid mixed signals from economic data and geopolitical tensions. While better-than-expected data and rising yields initially bolstered the dollar, the conflicting views from the FOMC about future rate cuts versus holding rates steady reflect uncertainty about inflation trends, which could keep the dollar volatile in the short term.