The dollar is starting the European trading session on a decline as bond yields retreat from their recent highs. While the drop in 10-year Treasury yields is significant at 4.6 bps to 4.550%, the decrease in European 10-year German bund yields is even more pronounced at 9.4 bps to 2.873%. This drop may be partially influenced by a softer French inflation report, but it is also possible that month-end and quarter-end flows are impacting the market. As a result, traders are relying on technical analysis to navigate the current market conditions.
The EUR/USD pair has seen a gain of over 0.3% for the day and has surpassed its 100-hour moving average. This shift in momentum has made the near-term bias more neutral. However, there are significant option expiries at the 1.0600 level that may keep price action sticky around that figure. Additionally, there is resistance from the 200-hour moving average at 1.0616.
GBP/USD is also experiencing a similar pattern to EUR/USD, with a gain of 0.4% to 1.2240 levels. On the other hand, USD/JPY has dipped below 149.00 to 148.65, representing a 0.4% decline for the day. The antipodean currencies, such as AUD/USD, have seen the biggest gains, benefiting from an improved risk mood. AUD/USD is up 0.9% to 0.6480, but it still faces strong resistance at the 0.6500 mark.
In conclusion, the dollar has weakened at the start of European trading as bond yields decrease. The EUR/USD pair has surpassed its 100-hour moving average, while the GBP/USD pair is also gaining. Meanwhile, USD/JPY has dipped below 149.00, and AUD/USD is experiencing significant gains. Traders are relying on technical analysis and monitoring option expiries and resistance levels for guidance in the current market conditions.