The dollar index slipped on Monday, still suffering after disappointing retail sales and employment data in recent weeks as well as a Fed campaign to quash worries over an inflation spike, which has prevented markets from pricing in rate-hike risk before 2023.
The broad dollar index has given up virtually all of the gains it made after Wednesday's sharp CPI rise.
With the Fed determined not to rush to reduce accommodation over inflation that officials believe will be transitory, markets think it could be September before they acknowledge substantial progress toward employment and average inflation goals as a trigger for discussions about tapering, a precursor to rate hikes much later on.
EUR/USD gained 0.1%, with the 1.2169 high by the May 11 post-payrolls peak at 1.21815 on EBS, which is now accompanied by the 21-day Bolli top it failed to close above last week.
Though last week's lows held the up trendline from April, techs look a little top-heavy as Wednesday's FOMC minutes, Thursday jobless claims and Friday's PMIs are awaited.
Sterling rose 0.33%, benefiting from the UK's broad pandemic reopening this week nL2N2N40AK.
GBP/USD is nearing May's 1.4167 peak, having nearly erased last Wednesday's 1.4154-050 drop in response to the surge in U.S. inflation.
The 2021 peak from February at 1.4240, the 50% Fibo of the 2014-20 drop at 1.4302 and the post-Brexit referendum recovery high from April 2018 at 1.4377 loom above.
USD/JPY fell 0.18%, with the current 109.075 low near the 109.065 daily tenkan and 50% Fibo of the rebound from the post-payrolls 108.34 low to the post-CPI high at 109.785.
A sub-109 close would target 108.34, and below there the 38.2% Fibo of 2021's rise at 107.71.
Ten-year Treasury yields have been consolidating below March's 1.775% recovery highs.
Even if Treasury and JGB yields were to stagnate, rising and much higher U.S. inflation versus minimal Japan inflation would preserve negative real rates spreads, eroding the dollar's value versus the yen nL2N2N41G1.
AUD/USD ran into kijun line resistance by the 0.7787 high, but recovered from an early risk-off slip to 0.7731 that came on concerns about possible pandemic outbreaks in Asia and a below-forecast rise in Chinese retail sales nL2N2N4032.
Bitcoin fell 5.9% to more than 3-month lows and ether slid 6.1% to its lowest since May 3, in the wake of more comments Elon Musk nL2N2N408C and broader selling of assets with huge capital gains.
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