The dollar posted modest gains Tuesday against the euro and pound, and a bit more so versus the rate-sensitive yen.
This as Treasury yields continued their recent rise on strong jobs data and widespread favoring of tapering by Fed officials nL1N2PG1GV, but EUR/USD losses have been limited by this year's key lows being nearby.
EUR/USD fell 0.16%, with its 1.1710 EBS low holding just above March's 2021 low at 1.1704.
With U.S. CPI data out Wednesday, and rising covid cases in the U.S. creating some risk for the recovery, and the Fed's tapering bias, a 1.1704 breakdown has been delayed.
Moreover, March's low brushed the 38.2% Fibo of the entire recovery from last March's lows to January's peak at 1.16945.
Since January, a major head-and-shoulders top formation has been building.
A break below March's low would affirm that bearish pattern, putting the 50% Fibo, and weekly cloud base at 1.14925 (1.15), in play.
Worries about slowing growth in China, a major export destination for the euro zone, and weak ZEW stats are also weighing on the euro nL1N2PH17Y.
Sterling is down about 0.05% and so far holding support at 1.38265, the 38.2% Fibo of late-July's rapid rebound.
With EUR/USD and the dollar index both near major dollar resistance levels, sterling's slippage was also limited.
Upbeat BRC data nL1N2PH1JZ, and the potential for the BOE to begin rate hikes ahead of the Fed next year, though in lieu of the faster tapering of asset purchases the Fed is considering, may keep prices in a tighter range ahead of U.S. CPI Wednesday, and UK GDP Thursday nL1N2PH18K.
USD/JPY gained 0.22% on the back of soaring Treasury-JGB yield spreads and a relatively innocuous risk response to those higher U.S. rates that have the potential to send stocks lower and the haven yen higher.
Prices have cleared the 61.8% Fibo of the July-August slide and are probing the July 23 swing high by 110.60, with the July 14 swing high, and daily cloud top at 110.70/73, the last barriers ahead of July's 111.66 high.
A close above these hurdles would reward specs and importers who have been buying dips over the past several weeks.
Further USD/JPY gains would also help Japan's crucial export sector, given relatively weak domestic demand amid pandemic lockdowns.
Aussie, and CAD, consolidated some of their post-payrolls losses, with CAD also benefiting from rebounding energy prices and reopening of its borders to many Americans.
Bitcoin's rally was rejected by the 50% Fibo of the April-June plunge, dragging Ether down to its already cleared 50% Fibo resistance, now support, that as some high-level executive departures from crypto companies follows the SEC's quest to rein in unregulated areas of the sector.
Wednesday's U.S. July CPI is forecast up 0.4% m/m on the core, and 0.5% m/m overall, vs up 0.9% for both in June.
The Fed seems more agreed that further substantial progress has been made on inflation, but would like to see more strong jobs data before getting too committed on tapering.
For more click on FXBUZ