Dollar pares earlier gains to sit lower on the day again

The greenback has given up its earlier advance, with EUR/USD moving up to 1.2144 and nearing a test of daily resistance closer to 1.2150 currently.

Elsewhere, commodity currencies have also pared their drop a few hours ago with AUD/USD turning back up to 0.7887 from 0.7860 earlier and NZD/USD moving back above 0.7300 after a brief dip below the figure level to start the session.

USD/JPY H1 22-02

USD/JPY has also slipped to 105.53 from a high of 105.85 earlier, with price action now resting back in between its key hourly moving averages i.e. near-term bias more neutral.

There's still some element of pushing and pulling in the market as the focus stays on the bond market as the new week gets underway.


Breakevens have leveled off in the past few days but yields still surged higher with 10-year Treasury yields moving up to as high as 1.39%. It has since eased to 1.36% but with Biden's stimulus plan set for a vote, reflation will remain a key theme this week.

Equities were marked lower earlier with S&P 500 futures having slipped by a little over 1% but has since trimmed losses to around 0.7%.

So far, sentiment is still reflective of a pullback to the recent rally (with a rout in bonds giving investors a reason to take some money off the table) and not a full-fledged risk aversion push. But just watch out in case the latter starts to take hold during the week.