The dollar rose to three-week highs on Monday but failed to push the euro below its 100-day moving average even with the help of strong U.S. ISM manufacturing nN9N2H701Y and construction spending nL1N2KW3DZ data, as well as ECB unease with the recent rebound in euro zone yields nL2N2KZ1OG
EUR/USD fell from last Thursday's high of 1.22435 on EBS to Monday's low of 1.2028.
A clear break below the 100-DMA at 1.2025 and February's 1.1952 low could put in play the 200-DMA at 1.1796.
Euro zone and Asian PMIs also recovered in February, though China lost some momentum nL2N2KZ0JJ.
Ten-year Treasury-Bund yield spreads fell 7bp from Friday's close, plumbing their lowest in a year.
A new U.S. COVID-19 vaccine nL3N2KZ2W9 and $1.9trln in relief spending nL2N2KZ10A are expected to accelerate the U.S. economy.
Global growth expectations allowed reflation trades to recover from February's month-end jitters tied to surging government bond yields.
Supply-chain disruptions heading into the expected surge in U.S. economic growth are raising inflation concerns, but the Fed appears unworried.
Major central banks are seen maintaining low or negative policy rates while also being expected to step in to keep longer-term yields from rising so fast they undermine financial market stability and the pandemic recovery.
Sterling's slide from last week's peak near long-term hurdles probed the daily kijun and 50% Fibo of February's 1.3566-4240 advance at 1.3903.
The retracement has been slowed by BoE Deputy Governor Dave Ramsden downplaying negative rates contingency planning nL2N2KZ1E0, with prices still well above the uptrend-defining 55-day moving average at 1.3695.
USD/JPY climbed toward 107.05/08 hurdles with the help of rising Treasury-JGB yields and the squeezing of spec shorts accumulated largely in the 102.595-5.68 range.
Prices are getting overbought on daily and weekly RSIs as prices near August's rebound high and the 61.8% Fibo of the June-January slide at 107.05/08 on EBS.
The 161.8% Fibo-projected top off January's 102.599-4.40 base is at 107.32 nL2N2KZ21Y.
High-beta currencies and cryptocurrencies gained against the dollar and other major reserve currencies in line with the recovery in stocks and other riskier assets.
AUD/USD rebounded ahead of Friday's risk-off lows by the 55-DMA after RBA yield curve control sent Australian 10-year bond yields down 22bp at one stage nL2N2KZ1AZ ahead of Tuesday's policy meeting and after overnight reports of surging home prices and job ads at their highest since October 2018 nL2N2KZ00W.
The economic calendar heats up again Wednesday with ADP, ISM services and the beige book report.
Fed Chair Jerome Powell's speech on Thursday and Friday's non-farm payrolls report follow.
For more click on FXBUZ