In turn, that is weighing further on the dollar as USD/JPY falls to a low of 147.45 and is contesting key technical support in the form of its 100-day moving average (red line) again now:
USD/JPY daily chart
The softer French and German PMI data may have something to do with the move lower in yields, as it reaffirms a continued slowdown in Europe’s largest economies. That being said, the devil is in the details. Both reports actually highlighted more stubborn and resistant inflation pressures and that will pose a conundrum for the ECB in trying to push for any rate cuts in the short-term.
The odds of a April rate cut did increase from ~72% before the data to ~78% now. Meanwhile, total rate cuts priced in for the year is now seen at 132 bps and up from 127 bps earlier. I would say it’s not a meaningful shift but it does show some movement in rates pricing in reaction to the data at least.
In any case, the dollar is facing some added pressure now with USD/CHF down 0.4% to 0.8670 and AUD/USD also at the highs around 0.6595 on the session.