The dollar recovered from early dips versus the euro and yen after November Empire State data sparked inflation concerns and higher Treasury yields nL1N2S61GN, while sterling benefited from rapid BOE rate hike hopes and high-beta currencies initially by firmer than forecast Chinese data nL1N2S603Z.
EUR/USD was an easy target for sellers nL1N2S61IA after ECB President Christine Lagarde reiterated her view that inflation will retreat next year and a rate hike would be counterproductive nL1N2S60WI.
The euro was also under pressure as Europe becomes the epicenter of the pandemic nL1N2S30S7, with rising COVID-19 cases triggering restrictions nL4N2S62S6.
cases have also begun to rise again, but trail Europe's uptrend.
The broader concern is that as temperatures fall in the northern hemisphere, cases and restrictions will rise, causing pandemic-related bottlenecks to persist.
The immediate dollar focus is on Tuesday's retail sales report, forecast up 1.1% overall and 0.9% for the control group that is the primary component of GDP.
If those lofty expectations are roughly met or exceeded, the dollar's post CPI report rally from last Wednesday should get fresh legs, particularly if 5-year Treasury yields clear their pre-pandemic lows and major technical hurdles at 1.30% signaling a broader rebound in rates.
EUR/USD fell 0.53%, breaking options defenses and triggering fresh selling below 1.1400 nL1N2S30MS.
The 61.8% Fibo of the 2020-21 pandemic range offers some support at 1.1290.
With last week's close well below the 50% Fibo at 1.1492 on EBS, the 61.8% looks very much in play.
USD/JPY was up 0.13%, and rebounded from Monday's early 113.755 session low on the back of higher Treasury yields following the inflationary Empire report.
USD/JPY may need Tuesday's retail sales to at least meet high expectations and 5-year Treasury yields to clear crucial resistance at 1.30% to take on October's 114.695 pandemic peak by the late 2017 major high at 114.74 nL1N2S61OG.
GBP/USD fell back toward flat in sympathy with the late plunge in EUR/USD and to a much lesser extent the late pullback in stocks.
Prices had higher up earlier on the pricing in of more rapid BOE rate hikes than the Fed nL1N2S61JY and correcting of sterling's rapid fall since late October.
That tumble left its technicals about as ripe for a rebound as they were after September, August and July slides.
AUD/USD was up 0.27%, but off early highs seen amid the risk-on response to unexpectedly upbeat Chinese data.
The 0.7370 high stopped shy of the daily tenkan at 0.7374 and not far above the 55-day moving average at 0.7366.
Antipodean AUD/USD and NZD/USD may find some seasonal support versus northern hemisphere economies dealing with renewed pandemic pressures.
Bitcoin fell about 2.5% and ether 1%, continuing to consolidate November's record highs.
Beyond retail sales, Tuesday's other U.S. releases are import and export prices, industrial production, business inventories and the NAHB housing market index.
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