The dollar struggled to hold above break-even on Thursday as a confounding drop in Treasury yields dented its interest rate appeal, outweighing exceptionally strong retail sales and unexpectedly low jobless claims.
Before the cavalcade of U.S. data, EUR/USD made a play for major resistance at 1.2000, but an unusual scramble to buy Treasuries, and to a lesser extent Bunds, left it in a choppy range.
Benchmark 10-year Treasury yields fell 10bps on the day to one-month lows, breaking key support at 1.59% after the retail sales and jobless claims reports then accelerating in the wake of poor U.S. industrial production nAQN041RXA, the day's only legitimate macro reason to bid up bond prices.
EUR/USD was in limbo below option-linked resistance at 1.2000 while the dollar index nursed wounds just above mid-March lows and the 50% Fibo of this year's recovery nL1N2M81UGnL1N2M802A.
The start of Japan's fiscal year may be partly to blame for the robust appetite for Treasuries nL1N2M802A, while traders who had bet on surging U.S. inflation and rising Treasury yields have been forced to cover shorts.
USD/JPY grinded to new April lows.
USD/JPY's close below key support at 109 on Wednesday and still top-heavy weekly charts and net spec positioning suggest further weakening is likely.
Next supports are at 108 and 107.77, the later the 38.2% Fibo of 2021's advance now that the 23.6% Fibo at 109 has been closed below.
There may also be some Japan repatriation risk linked to Friday's meeting between Prime Minister Yoshihide Suga and U.S. President Joe Biden that could complicate Japan's relationship with China, its biggest trading partner nL1N2M80CP.
Sterling was flat, confined to a modest 1.3762-809 trading range centered on the 21-day moving average at 1.3787.
March and April lows by 1.3670 have caught cable's fall, along with the 100-day moving average, last at 1.3701, which the pound hasn't closed below since June.
The stalled EUR/GBP recovery is also helping cable.
The rouble fell on the announcement of U.S. sanctions on Russia nL1N2M73BO, but most high-beta and emerging markets currencies gained amid tumbling Treasury yields, dollar weakness and gains in metals.
AUD/USD used a decent jobs report as fuel for a run at its upper 21-day Bolli by the daily cloud base at 0.7777.
Friday features Chinese GDP and Michigan sentiment data for April.
Next week's U.S calendar is exceptionally light, putting more focus on Thursday's ECB meeting.
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