The dollar trimmed intraday gains, tracking Treasury yields lower as a sharp stocks slide sent safe-haven flows toward the yen, while EUR/USD attracted buyers above the previous week’s low for the 10th consecutive week.
The dollar index’s rebound from Monday’s nearly two-and-a-half year low was capped by the pivotal 30-day moving average at 93.08.
The dollar failed to capitalize on continued data divergence marked by disappointing euro zone PMI data nL8N2G01PV and bigger-than-forecast drops in U.S. jobless claims nL1N2FZ1R7 and a near-forecast and still nicely expanding ISM non-manufacturing report nN9N2E8003.
This followed Monday’s ISM manufacturing index hitting its highest since November 2018 nL1N2FY141.
EUR/USD scrambled back above its 30-day moving average at 1.1819 after a fleeting foray below.
It hasn’t closed below it since May.
EUR/USD's 1.2014-1789 drop from Monday’s failed 1.2000 breakout and rejection by the downtrend from 2011 became a bit oversold, aiding the bounce before hitting last week’s 1.17625 low on EBS.
The real test for record-long IMM spec EUR/USD longs will be maintaining EUR/USD's streak of successively higher weekly lows after Friday’s U.S. jobs report.
If not, key Fibo supports to watch are at 1.1691/492/368, with the 38.2% by August's 1.1695 low and the 50% by March's 1.1495 peak nL1N2G00ZA.
The pullback in frothy stocks is only modestly EUR/USD-supportive, while EUR/JPY -- more directly in the line of risk-off fire -- held its uptrend line from May, the 30-DMA and the daily Kijun just under Thursday’s 125.30 low.
The dollar’s recovery against the yen was repelled near the pivotal 55-DMA, and was then accentuated by the tumble in stocks.
USD/JPY's drop from 106.55 found support by 106, but the combination of falling Treasury-JGB yields and stocks is bearish, particularly as the VIX spikes to its highest in a month-and-a-half.
USD/JPY remains in August’s roughly 105-107 range.
Sterling retreated further from its 1.3481 peak that came up shy of 2019’s 1.3516 pinnacle, but has more space to drop before testing last week’s 1.3054 low.
GBP/USD remains positively correlated with S&Ps, which tested uptrend line support from late-June at 3,436.
The risk-sensitive aussie tumbled against the dollar and yen, with AUD/JPY clinging to tankan support at 77.00.
USD/CNY remained above its pivotal 200-week moving average at 6.8095, working off oversold status.
The U.S. monthly employment report tops Friday’s bill, with the consensus payrolls call at 1.400 million versus July's 1.763 million, though the wide forecast range tends to temper market response.
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