The dollar index rose 0.25% as its slide from September's pandemic peak consolidates near the midpoint of the preceding rates-driven advance awaiting the outcome of this week's Fed, ECB and BoE meetings and a trove of important economic data.
EUR/USD was initially lifted to its 1.09135 Monday high by last week's 1.09295 trend high and 50% of the pandemic downtrend at 1.09385 on EBS after much higher-than-forecast Spanish inflation nL8N34F1QK.
That and upbeat euro zone economic sentiment nL8N34F34D sent bund and other euro zone yields up almost 10bp, bolstering the case for three more 50bp rate hikes by the ECB before pausing in H2.
That compares with about 60bp of additional Fed hikes, which are expected to be followed by several rates cuts from H2 onward.
News that Germany's statistics agency delayed the release of inflation data previously scheduled for Wednesday -- due to technical issues -- raised some worry for the euro ahead of Thursday's ECB meeting nL8N34F4A4.
Also in the mix was the unexpected 0.2% decline in German Q4 GDP nL8N34F24C.
EUR/USD fell 0.1%, shedding its early gains toward key resistance, but finding buyers by the 10-day moving average for an eighth straight day.
USD/JPY rose 0.45% as Treasury yields were dragged higher by competing bund yields, while JGB yields out to the 10-year BOJ yield cap were slightly lower.
A broadly bearish consensus for USD/JPY based on the BoJ eventually having to stop capping yields and buying almost all the debt the government sells remains in place.
For now it is Treasury yields driving prices, thus the importance of this week's key U.S. data and Wednesday's Fed meeting in renewing the downtrend with major resistance converging near 131 nL1N34F197.
Sterling fell 0.3% with the pullback in gilts-Treasury yield spreads, but like EUR/USD it has 10-DMA support and crucial resistance looming above.
The BoE is priced to hike 50bp on Thursday and about 1% before a Q3 peak.
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