Dollar cedes some ground ahead of European trading

The risk-off mood yesterday is making way for a light bounce in equities sentiment so far today, with S&P 500 futures seen up 0.7% now ahead of European morning trade.

That is seeing the dollar and yen give up some of its overnight gains but it isn’t anything that stands out too much.

EUR/USD is up 0.2% to 1.0575 while GBP/USD is up 0.3% to 1.2370 at the moment. There’s still some notable push and pull in the euro and pound yesterday, though the latter remains rather vulnerable amid a sharp drop in the past three weeks from 1.3000.

Despite the light bounce in risk sentiment for now, it’s hard to call for a major turnaround in the overall mood. Nothing has really changed in terms of the fundamental thinking in the market and recent theme-based flows are still looking rather dominant.

Amid the moves yesterday, commodity currencies are largely in focus with AUD/USD breaking below 0.70 and USD/CAD looking to try and chase a break above 1.30:

These are two key pairs that should be watched closely this week in the event a technical breakout is confirmed.