The dollar index rose 0.6% at the start of the fourth quarter as Treasury yields surged after a suspected U.S. government shutdown was temporarily averted, U.S. and European PMI divergence favored the U.S. currency favor and Fed speakers maintained the high rates for longer narrative.

Risk aversion also supported the dollar, dealing a blow to high-beta currencies such as the aussie and ZAR, while falling oil and copper added to derisking flows, as did rising yields across Europe.

EUR/USD fell 0.76% but held September's 1.0488 low and 2023's 1.0482 low from January on EBS.
The renewed selling reinforced the view that much of last week's rebound was quarter-end position squaring.

A close below the 1.0482 January lows would spotlight 1.0402, the 50% Fibo of the entire 2022-23 recovery.

U.S.
JOLTS on Tuesday, ISM non-manufacturing on Wednesday and Friday's employment report also remain key points of focus after the ISM manufacturing data improved more than expected, while prices paid tumbled to 43.8 from 48.4.

USD/JPY rose 0.27%, with Monday's 149.88 high on EBS on the edge of the 150 level many in the market worry will be used by the MoF as an intervention trigger point.
Japanese officials' rhetoric about the currency market has yet to match the intensity of language used before intervention last year.
A 150 breakout will likely the rely on this week's top-tier U.S. data to backstop a move toward resistance at 151.

Though there was more discussion at September's BoJ meeting about potential policy normalization, the window for a move is most likely Q1 2024, when wage negotiations are well underway.

The BoJ announced on Monday additional JGB buying for Wednesday in response to 10-year yields trading above 0.75% versus the bank's 1% hard cap.

Sterling fell 0.79% and hit its lowest since March, beset by risk-off dollar buying and still dour UK PMI.

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