The trigger point came in US trading as yields fell back, with 10-year yields in particular slipping way off after having tagged the 5% level in European trading. Perhaps Bill Ackman's tweet here had some part in it as well, as we saw yields fall to 4.84% in a notable reversal. But this isn't the first time it has happened at a key level though. I mentioned this last week:
"As we approach the 5% level, I can't help but think that the bond rout might trigger a sharp retracement upon hitting the key level. All that before we start getting used to talking about 5% again in the days/weeks ahead. It's a familiar playbook to when we hit 4% in July and 4.30% in August."
And the lack of dollar poise even as rates were rising in the last few weeks was a bit of a signal that the risks are skewed to the downside for the greenback in case of any retracement in the bond market. And we did see that yesterday, although less so in USD/JPY - which should've been trading much higher but for fears of Tokyo intervention in my view.
The drop yesterday does put the dollar in a bit of a tricky spot now though, as EUR/USD has broken past the first resistance barrier from the 23.6 Fib retracement level at 1.0643:
There are not many other material moves in other dollar pairs just yet but this could be a leading move that could spill over elsewhere if it carries on, especially if Treasury yields are to retrace further ahead of month-end.