USD softens as falling oil and bond yields lift risk before Fed, BoE, BoJ

Global markets rebounded as easing crude oil prices and a pullback in bond yields improved risk appetite ahead of a dense central bank calendar featuring the Federal Reserve, Bank of England and Bank of Japan. Lower oil reduces near-term headline inflation risk, while the drop in sovereign yields trims the carry advantage that has supported the US dollar, a mix that typically favours higher-beta currencies such as AUD/USD and NZD/USD and supports EUR/USD and GBP/USD. Softer crude is a headwind for the commodity-linked Canadian dollar, keeping USD/CAD supported on dips. USD/JPY remains sensitive to the US-Japan yield differential, with narrowing spreads and any hawkish BoJ signal capable of accelerating yen strength. GBP/USD direction hinges on how the Bank of England frames the pace of policy normalisation. With three major decisions clustered together, traders should expect elevated two-way volatility, thinner liquidity around announcements and the risk that pre-positioned risk-on trades unwind quickly if any statement lands more hawkish than priced.