Bids ahead of 1.3200 caught the falling knife and the euro has bounced nearly a half cent.
To understand the move, you have to look toward the yen. USD/JPY was able to withstand the first wave of selling in the yen crosses but it finally caved in the last hour. The drop to 97.70from 98.45 but wider pressure on the dollar. For now the rout in the bond market is a dollar negative but once yields stabilize the roughly 100 bps advantage of German 10s and 200 bps advantage of Japanese 10s will underpin the dollar.
