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Dollar

• In European morning trade, the dollar remains firm across the board. 
• The dollar, along with the yen, is the session’s frontrunner, as we continue to see the same old themes play out as the weekend approaches. 
• Higher yields, a stronger dollar, and more sluggish equities appear to be the order of the day in April, and I don’t expect much to change before the FOMC meeting on 4 May. 
• EUR/USD is pinned down 0.3 percent to test 1.0800 again, though recent lows near 1.0760 may provide some additional support for the pair for the time being. The euro, on the other hand, is expected to struggle despite markets pricing in a more hawkish ECB.
• Meanwhile, the pound is in free fall following a break below 1.3000 in cable. The next key support is the 50% retracement level at 1.2830, and the pair is currently trading down 1% around 1.2890. 
• The USD/JPY is remaining relatively flat around 128.30, but this belies the more volatile action seen earlier, when dip buyers stepped in after the pair fell to a low of 127.75. 
• The aussie and kiwi are also pinned lower, with the AUD/USD breaking below some key support levels:
• • Only the yen has outperformed the dollar in terms of gains so far today. • The dollar is seen advancing steadily across the board, with USD/JPY being the sole exception.
• Yesterday’s upside push was thwarted when price met resistance near 1.0934-37 before falling back. That doesn’t bode well for the euro, which is riding on hawkish ECB talk that may or may not materialise at the end of the day. 
• In the meantime, the GBP/USD is down 100 pips to 1.2925 as sellers seek to consolidate a break below 1.3000. As previously stated, the 1.2830 level is the next key support to monitor on the way down. 
• Elsewhere, the AUD/USD is currently down 0.8 percent to 0.7310, while the NZD/USD is down 0.9 percent to 0.6680.

Yuan 

• It is clear that the PBOC is establishing a new range for the Chinese yuan as the week comes to a close. 
• The offshore yuan fell to 6.52 per dollar today, its lowest level since July of last year. 
• Chinese policymakers disappointed expectations for an LPR cut this week, but they are compensating by supporting the economy in other ways. One example is the obvious weakening of the yuan. 
• The Chinese currency is on track for its biggest weekly drop against the US dollar since the pandemic’s early days. Allowing it to fall below 6.50 sets the stage for further declines until local governments step in.
• Previously, Chinese officials were content with a “range” of 6.30 to 6.40. We’re off to figure out where they’d like to see the currency hold next. 
• A break above the March 2021 high just above 6.58 will be watched, as a break above that could indicate that the PBOC wants a much weaker currency to boost exports.