The U.S. dollar edged higher on Wednesday, rebounding from near 11-week lows as U.S. Treasury yields recovered following recent declines driven by weak economic data and uncertainty over tariff implementation.
The dollar index, which measures the currency against six major peers, rose 0.30% to 106.56, up from a weekly low of 106.12, the weakest since December 10.
On Tuesday, signs of economic deceleration and policy concerns pushed investors toward safe-haven bonds.
U.S. Treasury Secretary Scott Bessent said the economy appeared more fragile than traditional economic indicators suggested, citing interest rate volatility, persistent inflation, and job growth dependency on the government sector. He also described tariffs as an important source of revenue.
The 2-year U.S. Treasury yield, which dropped to 4.074% on Tuesday, its lowest level since November 1, rose 3 basis points to 4.125% in London trading. Money markets are pricing in 54 basis points of Federal Reserve rate cuts by year-end, reflecting expectations of two 25-basis-point reductions and a 20% chance of an additional cut.
The euro declined 0.25% to $1.0488 after reaching $1.0528 on Monday, its highest since January 27. European Central Bank policymakers continue to assess the impact of the current 2.75% rate, with discussions ongoing about future rate adjustments as inflation remains slightly above target.
Global markets are closely monitoring ongoing diplomatic discussions, including upcoming expert-level talks between Russia and the U.S. The Kremlin confirmed preparations are underway, while Ukraine and the U.S. have finalized an agreement concerning Ukraine’s natural resources. The Canadian dollar weakened to a fresh two-week low, while the Mexican peso remained steady amid tariff concerns.
Trump reaffirmed on Monday that duties against Canada and Mexico would proceed as scheduled on March 4. Mexican President Claudia Sheinbaum said discussions were ongoing to prevent a potential trade dispute, while Canadian Minister Francois-Philippe Champagne stated that efforts to address U.S. concerns over border security would continue.
The U.S. dollar climbed to C$1.4348, its highest level since February 12, before dipping 0.1% to 20.4443 pesos. Against the yen, the dollar rose 0.35% to 149.54 after hitting a low of 148.56 on Tuesday, its weakest since October 11.
Bitcoin remained steady at $88,242 after falling 5.6% on Tuesday, when it reached $86,003.11, its lowest level since mid-November.
