The dollar put in a mixed performance on Monday, gaining against the euro and yen while giving up ground to the sterling and, especially, the commodities-fueled aussie as markets awaited a Federal Reserve meeting later in the week.
EUR/USD rose to a high of 1.2117 in Asia on EBS but stopped short of trendline resistance from January's peak, with added pressure following a below-forecast German Ifo report nL8N2MJ1X0 and expanded weekly ECB quantitative easing nAPN04TPX0.
Disappointing headline U.S. durable goods orders triggered a pullback in longer-term Treasury yields and the dollar, helping EUR/USD rebound away from cloud top and 100-day moving average support.
But ex-transportation orders expanded 1.6% as expected nAQN0434I9, and 2-year Treasury yields rose to two-week highs on a soft 2-year auction and the speculation that the Fed might have to acknowledge that the U.S. recovery is more robust than expected.
EUR/USD nL1N2MJ1J7 and the dollar index sent warning signals that the dollar's April sell-off may have gone too far, particularly if the Fed sounds more upbeat, implying less delay before pruning emergency easing measuresnL1N2MJ1GX.
USD/JPY is the most oversold of the major dollar pairs after its 3.1% dive from March's peak to Friday's low and generated its first bullish reversal signal in 11 sessions nL1N2MJ1PZ and a higher high and low.
It faces a thicket of nearby resistance and more by prior key support at 109.
Reclaiming 109 looks even more important after already sizeable spec longs grew last week to their largest since May 2019.
The BOJ meet on Tuesday, though they remain limited in their policy options and focused primarily on keeping JGB yields out to 10-years tethered in tight ranges near zero, while doing as little balance sheet expansion as possible to keep financial conditions accommodative nL4N2ME1BW.
Sterling gave up most of its early gains, but found support near the rising 10-day moving average and inside a daily Cloud that's about to collapse to a tiny range below 1.3900 by Thursday.
AUD/USD rose 0.77%, and most high-beta currencies advanced against the haven dollar, yen and Swiss franc on hopes recoveries in developed market economies and lavish monetary policy will support commodities and other riskier or higher yielding assets.
Bitcoin and ethereum rallied, boosted by reports that JPMorgan Chase plans to offer a managed bitcoin fund nL1N2MJ1XF.
Tuesday's BOJ meeting and Wednesday's FOMC are the main events, followed by U.S. Q1 GDP and weekly jobless claims reports on Thursday.
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