Dollar Stabilizes Ahead of Powell Speech and China GDP Data

The U.S. dollar held onto modest gains early Wednesday as markets paused after weeks of sharp selling and ahead of key economic events. Investors are watching for updates on U.S.-China trade talks, while attention also turns to upcoming speeches from Federal Reserve Chair Jerome Powell and economic data releases, including China’s Q1 GDP.

The U.S. dollar index hovered near 99.90 after briefly topping 100 overnight. The euro retreated from a three-year high of $1.1474 to $1.1311, reflecting profit-taking after a 4.5% gain this month and the lack of significant progress in trade negotiations. Meanwhile, the British pound surged to a six-month high of $1.3254, buoyed by optimism surrounding a potential U.S.-UK trade deal. U.S. Vice President JD Vance said the President “loves the United Kingdom,” hinting at strong bilateral ties.

The Canadian dollar, up 4% in April, traded at C$1.3948, ahead of the Bank of Canada’s policy decision, with a 40% chance of a rate cut priced in. The Swiss franc remained firm at 0.8184 per dollar, marking strong gains since President Trump’s tariff hike announcement.

The Australian and New Zealand dollars dipped slightly from recent peaks, trading at $0.6334 and $0.5896 respectively. The yen held steady at 142.85 per dollar.

Markets are also closely tracking the U.S. bond market for signs of stabilization, as last week’s panic selling disrupted the usual link between Treasury yields and the dollar. A recovery in yields could restore support for the greenback, according to Standard Chartered's Steve Englander.

Meanwhile, China’s management of the yuan remains in focus. A significant devaluation could lift the dollar further, especially as tariffs escalate. Traders remain cautious, awaiting signals from macro data and central bank policy.