The dollar fell for a third day on Tuesday, helping send EUR/USD to a 6-session high as the U.S. currency continued to struggle in the shadow of newly emboldened cryptocurrencies following this week's news of Tesla's bitcoin investment.
EUR/USD broke through the 10-DMA and probed above the 21-DMA at 1.2106 -- for the first time since tumbling below it on Jan.
11 -- as it plotted a course toward last week's high of 1.2145 on EBS and the 55-day moving average at 1.2134 nL1N2KF1SL.
After tumbling to start this month, EUR/USD has rebounded since holding key support on Friday before the disappointing U.S. jobs data took the wind out the dollar's sails.
22 B-wave high at 1.2190 looks pivotal ahead of January's 1.2349 trend high.
Though bitcoin's rally slowed, its latest rise on the potential for greater corporate acceptance could make dollar alternatives more popular as the huge recovery bill in Congress raises questions about the cost of stimulus, which will spur reflation trading and possibly increase inflation, neither of which is good news for the U.S. currency.
Sterling hit its highest since April 2018 amid the risk-on and haven dollar selling flows, with the 1.38 handle now breached following weeks of fumbling around either side of 1.37.
With little material resistance until the 1.40 area, a 1.38 breakout could be dynamic.
USD/JPY's heavily overbought state heading into this week gave it an extra push lower, trading its lowest in eight days and probing support at 104.55 from the 50% Fibo of its 103.33-5.765 rise off the Jan.
21 swing low.
A close below there and the 100-day moving average would shift the support focus to the daily cloud top and kijun at 104.14/18 nL1N2KF2CA.
The pullback in Treasury note and bond yields from key resistance hit on Monday added to the USD/JPY selling.
Those yield pullback appear to be corrections within uptrends that massive fiscal stimulus and faster COVID inoculations are fostering.
Thus, dollar downside from lower Treasury yields could be temporary.
Commodity currencies did not perform nearly as well as the major reserve currencies, partly because commodity prices also became less one-sided, along with stocks and even some slowing of the bitcoin advance.
Wednesday brings U.S. CPI and speeches from ECB President Christine Lagarde and Fed President Jerome Powell.
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