The dollar index recovered from a five-session low on Thursday mainly with the help of EUR/USD, which went into reverse after surrendering initial gains following the ECB nL1N2OY07V and an unexpected rise in U.S. jobless claims nL1N2OX1Y5, while sterling broadly outperformed the majors.
With the ECB proving no more dovish than had been expected, EUR/USD shorts booked some profits, accounting for the fleeting gains in the immediate aftermath of the meeting and the disappointing jobless claims.
But by late-U.S.
trade, EUR/USD was down 0.15%, well off Thursday's 1.1831 high on EBS but still above Wednesday's 1.1752 trend low a short distance from this year's 1.1704 nadir.
The Fed, which meets next week, remains more likely to sunset pandemic-driven emergency easing measures over the next several quarters, with U.S. inflation and baseline economic growth potential well above the euro zone's.
CDC data showing rising COVID cases and hospitalization concentrated in certain areas nW1N2NK018 also boosted risk aversion slightly.
The dollar is close to this year's highs against the yen and euro, but it is a bit overbought so further gains may be difficult as investors await confirmation after next Wednesday's FOMC meeting that Fed policy is indeed diverging from the BOJ and ECB.
Sterling gained 0.45%, reaching its 10-day moving average by the 1.3787 high, a 0.6% recovery from the June-July collapse to Tuesday's 1.3572 low a tic above February's lows.
The 0.66% drop in EUR/GBP also offered the beleaguered pound some relief.
That amid diverging policy biases among the shifting MPC membership nL8N2OY2IO, the potential for certain UK pandemic restrictions being reinstated due to rising cases and the ongoing rift with the EU regarding the Irish Protocol nL8N2OY3ZO.
USD/JPY fell 0.08%, finding support by 110 and resistance at the daily kijun and 50% Fibo of July's 111.66-109.07 slide at 110.36.
The 110.02 low on EBS found buyers by the 10-day moving average, with an afternoon rebound in choppy equity prices dimming the early yen haven gains.
The recovery from Monday's slide has been supported by the rising daily cloud, the top of which is at 109.85 by Wednesday's low.
A close above the 61.8% Fibo of July's slide and July 14 B-wave high at 110.67/70 is the main technical hurdle ahead of the 111.66 highs, that and a dollar-friendly Fed next week nL1N2OY1K4.
Aussie was up 0.33%, as its oversold bounce extended toward Monday's 0.7402 high.
Bitcoin and ether recoveries from important supports tested earlier in the week are both running into resistance from daily kijun lines situated below sizeable daily clouds.
Friday's feature is July PMIs that are expected to remain quite strong.
For more click on FXBUZ