Lower yields add to the drag in the dollar so far today

<p>In turn, that is weighing further on the dollar as USD/JPY falls to a low of 147.45 and is contesting key technical support in the form of its 100-day moving average (red line) again now:</p><p>The softer French and German PMI data may have something to do with the move lower in yields, as it reaffirms a continued slowdown in Europe's largest economies. That being said, the devil is in the details. Both reports actually highlighted more stubborn and resistant inflation pressures and that will pose a conundrum for the ECB in trying to push for any rate cuts in the short-term.</p><p>The odds of a April rate cut did increase from ~72% before the data to ~78% now. Meanwhile, total rate cuts priced in for the year is now seen at 132 bps and up from 127 bps earlier. I would say it's not a meaningful shift but it does show some movement in rates pricing in reaction to the data at least.</p><p>In any case, the dollar is facing some added pressure now with USD/CHF down 0.4% to 0.8670 and AUD/USD also at the highs around 0.6595 on the session.</p>

This article was written by Justin Low at www.forexlive.com.