The dollar rose modestly on Monday, pushing EUR/USD to new trend lows, in trade dominated by month-end consolidation and positioning, except for a more substantial rise against the yuan.
EUR/USD slipped to its lowest since early November, marginally breaching last week's 1.1762-63 lows amid slightly wider Treasury-Bund yield spreads and mixed risk sentiment that favor the dollar as a haven.
The reopening of the Suez Canal nL1N2LR06I offered some relief after lingering concerns about fallout from a hedge fund's default on margin calls nL1N2LR003 and more pandemic problems in Europe nL8N2LQ0JRnL8N2LR53D.
The U.S. CDC warned of "impending doom" from a COVID-19 surge and restrictions ease nW1N2K2029.
This was overshadowed by the Biden administration's new multi-trillion dollar spending plan due for official announcement midweek, and reportedly to include bigger tax increases than previously expected nL1N2LR1HU.
Anticipation of the long-term plan has been boosting Treasury yields and underpinning the dollar for weeks.
If this week's U.S. employment and ISM data are as vibrant as forecast, EUR/USD, with its fresh cadre of spec longs, taken right before its broke critical 200-day moving average support last week, could give way to a retest of November and September lows, as well as other technical support by 1.1600 nL1N2LR19B.
Sterling's rebound from Thursday's 1.3671 low ran into offers near the underside of the up trend-line from November that it broke below last Tuesday.
Firmer Treasury-Gilt yield spreads and choppy stocks pulled cable back below the pivotal 55-day moving average at 1.3820.
EUR/GBP hit its lowest in 13 months in early trading, but then recovered to above this month's prior repeated lows in the 0.8530s.
USD/JPY remains supported by rising Treasury yields and was close to Friday and June's 109.85 highs and 110 options defenses.
A breakout above those hurdles is suggested by a grouping of key upside measured objectives, options strike demand and last year's high by 112 nL1N2LR10G.
Assuming those targets in the 112.00-23 range are reached, the combination of heavily overbought daily and weekly oscillators and already bulky net spec long positioning would increase the risk of a sizeable correction from there.
USD/CNH rallied nL1N2LR1FM on rising Treasury yields and derisking tied to simmering tensions between China and other countries, particularly in the West.
The yuan's fall may also have been hit by the hedge fund margin call default nL1N2LR003.
The next major economic reports from the U.S. are ADP on Wednesday, jobless claims and ISM manufacturing on Thursday and the monthly employment report on Friday.
For more click on FXBUZ