The US dollar is showing mixed performance as market sentiment improves toward the end of the week. Among major currencies, the dollar-bloc is leading the gains, while the Japanese yen and Swiss franc lag behind. Japan's wage negotiations have yielded promising early results, though a fresh political scandal may weaken Prime Minister Ishida's already fragile government. Emerging market currencies are generally strengthening, with the Mexican peso reaching its highest level since the US election. Meanwhile, gold has hit record highs near $3,000, and oil prices remain steady, with May WTI trading within the previous session’s range.

Asia Pacific Markets

The People's Bank of China (PBOC) has successfully maintained a stable yuan, with the dollar slightly declining against the onshore currency this year. However, recent lending figures were lower than expected, signaling that China’s economy may be off to a slow start in 2024.
Meanwhile, the Japanese yen has weakened despite strong wage growth, as US interest rates remain firm. The dollar is testing key resistance levels against the yen, climbing toward JPY149 after touching a multi-month low earlier in the week. Additionally, political uncertainty in Japan, stemming from a new government scandal, could impact market confidence.

European Markets

The euro faced resistance near $1.0950 earlier in the week and has since retreated, with potential for further declines if key support levels break. The narrowing US-German bond yield gap, which recently hit its lowest point in months, could provide some relief for the euro. In Germany, ongoing discussions about defense spending and fiscal policy are critical ahead of the Bundestag session on March 26.
Meanwhile, the British pound has remained above $1.29 despite weaker-than-expected economic data. The UK economy contracted by 0.1% in January, with declines in industrial output and construction, but the Bank of England still expects moderate growth this year.

American Markets

The US dollar remains under pressure, struggling to regain momentum above the 104.00 level. The Dollar Index appears to be forming a rounded bottom, yet faces resistance at 104.25. Investors are watching upcoming economic data, including retail sales and industrial production, which may help ease fears of an economic slowdown. The Federal Reserve's upcoming meeting is expected to hold rates steady, with updated forecasts providing more clarity on future policy direction. Meanwhile, US government funding negotiations continue, with at least seven Democratic votes in the Senate needed to avoid a potential shutdown.