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Greenback, Yields Moving in Lockstep as USD/JPY Fails to Crack Resistance

USD
  • Greenback continues to move in lockstep with the reversal in the front-end of the US yield curve, with EUR/USD now having rallied close to 75 pips off the initial NFP lows.
  • Price action this week has raised questions over whether the USD recovery has been corrective, or a broader reversal follow the turn of the year, and USD/JPY's failure to top the 50-dma today will argue in favour of a correction, with the fade off highs keeping the RSI looking broadly neutral - alleviating the previously oversold condition.
  • EM currencies have also been a major beneficiary from the reversal, with USD/MXN a standout and trading well back below 17.00 to narrow the gap with 16.8615, the late Dec low and bear trigger for the pair.

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