It's a bit of an assuming start to European morning trade for major currencies, despite the slightly more positive risk mood.

The euro is down slightly just back under 1.0700, seeing its gains over the past two days stall for a bit. I outlined some thoughts about the single currency yesterday here and why any extended bounce may not hold given the market outlook.

One of the more intriguing dollar pairs now in my view is USD/JPY after the drop below 127.00 yesterday to its lowest since 18 April:

USDJPY D1 25-05

The pair is seeing a light bounce back near the figure level but from a technical perspective, sellers are certainly looking poised to try and push the agenda. If they can hold a firm break below 127.00, the 125.00 level is the next key target.

The fact that Treasury yields are also tailing off from its recent highs is also helping to keep the downside momentum for now. 10-year yields are down to near 2.75% now from a high of 3.20% just two weeks ago.

Looking elsewhere today, the kiwi is the lead gainer after the RBNZ hiked rates by 50 bps as expected. But the central bank outlined a more hawkish rate projection, underlining its conviction to hike rates beyond neutral in order to rein in inflation.

That has taken NZD/USD to test 0.6500 on the day:

NZDUSD D1 25-05

The 38.2 retracement level @ 0.6529 and the 4 to 5 May highs around 0.6550-68 will be key resistance points to watch next.

Besides that, the dollar is keeping rather steady overall with little change observed among other major currencies.