US currency struggles to extend downside correction and upside pressure gradually takes upper hand. The dollar index (DXY) bounced back from 102 and rose to 102.50 points.

Risk assets are also awaiting news, and the American stock market did not set the tone for trading yesterday due to a national holiday. The monetary stimulus from the Bank of China did not meet expectations, as the central bank only reduced the 5-year rate for prime borrowers by 10 basis points (0.1%) to 4.2%. Stronger support was expected. The yuan decreased against the dollar by 0.23%, providing a basis for the dollar's strengthening against Asian counterparts. The minutes of the Reserve Bank of Australia's meeting disappointed the Australian dollar, as the content indicated the central bank's uncertainty about further rate hikes. Along with the AUD, the NZD also went into correction.

The inversion of yield curves (short-term bond rates rising, long-term rates declining) in the US and EU continues to explore new lows, as investors factor in the growing risk of inflation reversal, so central banks, after a short period of tightening, will be forced to start lowering rates. However, stock markets are hopeful about the labor market and still stable consumer demand in assessing growth prospects, which outweighs the factor of increasing attractiveness of bonds whose yields are rising.

EURUSD found balance near 1.091/1.0930, but the momentum to break through 1.10 clearly faded in the absence of growth catalysts. Bullard's speech today, as well as the risks of profit-taking in the stock markets, may provide additional support to the dollar this week, so the dollar index will touch the upper channel boundary within which a downward movement is developing (102.80):

For the EURUSD pair, this would correspond to a correction towards 1.0850.