The dollar surged higher on Monday, enjoying its best day since June as stocks tumbled on increasing pandemic, economic and political concerns, knocking the euro back and pummeling sterling.
Technical indicators signaled a deeper rebound was possible, with the dollar index clearing the neckline of its inverted head-and-shoulders chart pattern nL2N2GI152.
The break would indicate a measured objective of 2% gains above that neckline to 95.49.
That target is also near the 61.8% Fibo of the June-September slide.
Investors have used the U.S. currency, made cheap after the Fed slashed interest rates near zero, to fuel reflation trades in stocks and other risk assets, the reversal of which means they must buy back dollars.
Technically, a thick 93.74-4.97 daily ichimoku cloud and the 38.2% Fibo are interim obstacles to the dollar's recovery, along with the downtrend line from March at 94.81 on Tuesday.
EUR/USD struck a six-week low, but because the euro is also a major reserve currency and also used to fund risky trades, it's more of a task to get its topping formation to break August's low and the 38.2% Fibo of the June-September advance at 1.1695/91, widely seen as 1.17 support nL2N2GI0QI.
ECB President Christine Lagarde said exchange rate developments must be assessed carefully in light of the uncertainties nF9N2G600S, as the pandemic forced new restrictions across Europe nL5N2GI2YJ.
Early risk-off flows drove USD/JPY to key support at 104 before a sharp rebound toward 105.
Failure to break 104 amid widespread dollar buying left tight trailing stops on USD/JPY shorts at risk, as did oversold daily RSIs.
Long-term charts remain bearish, and the yen is favored against most currencies, particularly high-beta and commodity-linked currencies.
Sterling slid back toward September's 1.2763 low as risks of new UK pandemic restrictions grew nS8N2G605M, while there was still no progress in reaching a Brexit deal, with the October window for doing so approaching nL2N2GI0QH.
GBP/JPY has nearly retraced half of its recovery from March's lows to this month's high at 133.41 versus Monday's 133.52 low.
Japan is on holiday until Wednesday, but there is the usual unease about the Ministry of Finance using verbal intervention to prevent the safe-haven yen from rallying too far.
WTI fell over 5%, silver roughly 9% and gold 2.2%, with copper off 2.8% as stress in stock markets and other reflation trades creates pressure to take profits in other assets.
Fed Chair Jerome Powell and Treasury Secretary Mnuchin go before Congress on Tuesday.