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The market is moving away from the post-NFP narrative and settling into the part where it is figuring out a new theme at the moment.
The key to that rests on the bond market in my view with 10-year Treasury yields briefly nudging above 1.38% but is still seen holding just below the double-top in August at the moment, ahead of the auction later today.
That will keep yen pairs in an interesting spot, with AUD/JPY running into resistance from its 200-day moving average once again near 82.00 yesterday.
The 6 July high for NZD/JPY at 78.77 will also be a key resistance point to watch in case the pair does try to go in search of a next leg higher on any yields breakout.
Going back to the core theme in FX, the dollar is likely to keep steadier given underlying conditions and the fact that Fed officials are likely to reaffirm taper sentiment despite the NFP miss on Friday last week.
Bullard already gave us a bit of a taste earlier so expect more remarks such as that to limit any potential downside in the greenback.
Adding to that, the risk momentum looks to be losing some steam and profit-taking in equities could spur more defensive tones in the market; also benefiting the greenback.
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