The dollar index (DXY00) climbed to a 2-week high today and is up by +0.35%.  The dollar has safe-haven support on concerns of a protracted Iran war after President Trump told the Financial Times on Sunday that he wants to "take the oil in Iran" and could seize the export hub of Kharg Island, which would involve US ground troops and mark a major escalation of the conflict.  Gains in the dollar are limited, as today's decline in T-note yields has weakened the dollar's interest-rate differentials. 

Swaps markets are discounting the odds at 3% for a +25 bp rate hike at the April 28-29 FOMC meeting.

The dollar continues to be undercut by a poor outlook for interest rate differentials, with the FOMC expected to cut interest rates by at least -25 bp in 2026, while the BOJ and ECB are expected to raise rates by at least +25 bp in 2026. 

EUR/USD (^EURUSD) fell to a 1-week low today and is down by -0.42%.  The euro is under pressure today from a stronger dollar.  Alos, today's economic news that showed the Eurozone Mar economic sentiment index fell more than expected to a 6-month low is bearish for the euro.  In addition, today's +2% rally in crude oil prices to a 3-week high is negative for the euro and the Eurozone economy, as Europe imports most of its energy.  Losses in the euro are limited after German Mar CPI posted its largest year-on-year increase in two years, a hawkish factor for ECB policy. 

The Eurozone Mar economic sentiment index fell -1.6 to a 6-month low of 96.6, weaker than expectations of 96.7.

German Mar CPI (EU harmonized) rose +1.2% m/m and +2.8% y/y, right on expectations with the +2.8% y/y gain the largest year-on-year increase in two years.

Swaps are discounting a 52% chance of a +25 bp rate hike by the ECB at the April 30 policy meeting.

USD/JPY (^USDJPY) today is down by -0.46%.  The yen recovered from a 1.75-year low against the dollar today, rising as comments from Japan's top currency official sparked short covering after he said the government may take bold action in foreign exchange markets if the yen continues to weaken.  The yen added to its gains today when BOJ Governor Kazuo Ueda said the BOJ "will be watching currency moves closely." Falling T-note yields today are also supportive of the yen.

BOJ Governor Kazuo Ueda said currency movements are a major factor affecting the economy and prices, and that the BOJ "will be watching currency moves closely." 

Japan's vice minister for international affairs, Atsushi Mimura, the country's top currency official, said, "We're hearing increasing concern that speculative activity is picking up in the foreign exchange market.  If this situation continues, we believe decisive action may soon be necessary."

The markets are discounting a +70% chance of a 25 bp BOJ rate hike at the next meeting on April 28.

April COMEX gold (GCJ26) today is up +29.80 (+0.66%), and May COMEX silver (SIK26) is up +0.859 (+1.23%).

Gold and silver prices are moving higher today as concerns about a protracted Iran war are boosting safe-haven demand for precious metals.  The war with Iran has entered a fifth week with no end in sight.  Precious metals added to their gains today after President Trump said that he wants to "take the oil in Iran" and could seize the export hub of Kharg Island, which would involve US ground troops and mark a major escalation of the conflict.  In addition, lower global bond yields today are bullish for precious metals.  

Precious metals fell back from their best levels today after the dollar index rallied to a 2-week high. Also, today's stock rebound has reduced safe-haven demand for precious metals.  In addition, today's +2% rally in WTI crude oil to a 3-week high raises inflation expectations that may keep the world's central banks pursuing restrictive policies, a bearish factor for precious metals. 

Precious metals have safe-haven support amid concerns about the escalation of the war in the Middle East. Saudi Arabia agreed to give the US military access to King Fahd Air Base, and the UAE closed an Iranian-owned hospital and club.  Iran's Middle Eastern neighbors are growing frustrated with Iran, which has responded to US and Israeli attacks by hitting targets in several nearby nations. 

Precious metals continue to see strong safe-haven demand amid the ongoing war in Iran.  Also, uncertainty over US tariffs, US political turmoil, large US deficits, and government policy uncertainty are boosting demand for precious metals as a store of value.

Recent fund liquidation of precious metals is bearish for prices, as long holdings in gold ETFs fell to a 3.5-month low last Friday after climbing to a 3.5-year high on February 27. Also, long holdings in silver ETFs fell to a 6.25-month low last Friday after rising to a 3.5-year high on December 23.

Strong central bank demand for gold is supportive of gold prices, following the recent news that bullion held in China's PBOC reserves rose by +40,000 ounces to 74.19 million troy ounces in January, the fifteenth consecutive month the PBOC has boosted its gold reserves.