(Alliance News) - The dollar moved off overnight highs as traders digest a trio of rate decisions and continue to monitor events in the Middle East, while the yen surged on an intervention threat.

There was also a slew of US data in focus, with numbers showing growth picked up at the start of the year, though at a slower pace than expected.

The Federal Reserve left rates unmoved on Wednesday. However, in a sign of deepening divisions on the Federal Open Market Committee, Governors Beth Hammack, Neel Kashkari, and Lorie Logan, who backed maintaining the target range for the federal funds rate, said they did not support inclusion of an easing bias in the accompanying statement.

"Two-year Treasury yields jumped 11 basis points, the biggest Fed-day move since 2022. Jerome Powell said he will stay on the board after his chair term ends and remain through the ongoing criminal investigation," analysts at Saxo commented.

At the Bank of England, there was also a hold, though the central bank set out three scenarios for the UK's economic outlook as it assesses options for monetary policy, each assuming more prolonged energy price volatility than the last.

The European Central Bank also held in a decision that was unanimous, though a rate increase was discussed, according to President Christine Lagarde.

Against the dollar, the euro fell to USD1.1687 on Thursday from USD1.1700 on Wednesday. Sterling edged up slightly to USD1.3507 from USD1.3504. Against the euro, the pound climbed to EUR1.1552 from EUR1.1543.

Analysts at ING commented: "The Bank of England kept rates on hold in April, but as the crisis in the Middle East drags on, the chances of modest tightening are rising. We now expect a 'one and done' rate hike in June."

Versus the yen, the dollar sunk to JPY156.84 on Thursday from JPY159.94 on Wednesday. Japan's finance minister hinted strongly Thursday that Tokyo was close to intervening in the market to support the yen, after the currency slipped to its lowest level against the dollar since mid-2024.

"We are finally nearing the moment to take resolute measures that I referred to before," Finance Minister Satsuki Katayama told reporters in remarks that help boost the yen.

The buck had traded as high as JPY160.72 earlier on Thursday.

The dollar index fell to 98.47 points on Thursday from 98.70 on Wednesday.

The Swiss franc rose to USD1.2751 from USD1.2658.

Against the Australian dollar, the buck edged up to AUD1.3977 from AUD1.3973. Versus its Canadian counterpart, it faded to CAD1.3667 from CAD1.3675.

US economic growth picked up in the first quarter, though at a weaker pace than expected, while separate data on Thursday showed inflation pressure accelerated markedly in March.

Gross domestic product rose 2.0% in the first three months of the year on an annualised basis quarter-on-quarter, the Bureau of Economic Analysis said, picking up from 0.5% in the final quarter of 2025.

"Compared to the fourth quarter of 2025, the acceleration in real GDP in the first quarter of 2026 reflected upturns in government spending and exports, and an acceleration in investment that were partly offset by a deceleration in consumer spending. Imports turned up," the BEA said.

Growth was shy of the FXStreet cited forecast, which estimated a 2.3% advance.

By Eric Cunha, Alliance News news editor

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