Headlines:Dollar steadies a little, aussie and kiwi lead on the sessionDollar bruised going into the final stretch of the weekEquities look to book end the week with another day of gainsECB’s Nagel: First rate move should come in July, more to follow in 2H 2022Japan PM Kishida: Specific monetary policy tools are up to BOJ to decideEvergrande reportedly mulling repaying offshore bondholders with cash instalmentsMarkets:NZD leads, EUR lags on the dayEuropean equities higher; S&P 500 futures up 0.2%US 10-year yields down 3.3 bps to 2.725%Gold up 0.5% to $1,858.66WTI crude down 0.5% to $113.55Bitcoin down 1.6% to $28,940It was a quiet session for the most part as markets kept rather calm heading into the final stretch of the week.The dollar is trading more mixed, somewhat steadier after a slight decline early on. But as equities look to book end the week with another day of gains, commodity currencies are leading the charge in FX.Both the aussie and kiwi are posting modest gains on the day, with AUD/USD and NZD/USD both racing higher by 0.6% to 0.7145 and 0.6520 respectively; both also testing its 38.2 Fib retracement level of the swing move lower since April as outlined here.The greenback was weaker early on but regained some composure with large option expiries capping EUR/USD price action in a drop from 1.0750 to 1.0700 on the session. USD/JPY tracked around 126.85 to 127.05 throughout, showing little poise as well.Meanwhile, stocks are posting slight gains as US equities look to put an end to seven straight weeks of losses ahead of the weekend.All in all, this points to some breathing room after the moves in April and early May. And with the bond market perhaps hinting at a change in the narrative, we might be looking at a crossroads as to figuring what comes next for markets.

Inflation will not fall overnight, could take some timeHe adds that the ECB „must send a clear signal“ to where it is going in the June meeting. I think it is rather clear already that they will at least be hiking rates in July. Another move in September is likely but beyond that, there might be some challenges as recession risks start to rear its head into the picture.

It will be Memorial Day on Monday, so the US will observe a long weekend in the coming days. With US markets out, that might make for a bit less of an interesting start to the new week come next week. But fret not, volatility should resume quickly with month-end trading in focus on Tuesday.

The greenback is finding some steadier footing on the day but remains pinned lower against commodity currencies as risk sentiment tilts slightly more positively on the session. EUR/USD has fallen off from 1.0750 to 1.0710 in European morning trade, with the high earlier touching 1.0765. Large option expiries may be a factor though, as pointed out earlier with the pair seeing a significant chunk around 1.0760-80 – helping to cap gains.
The same can be said for USD/JPY which is keeping close to 127.00, where there are a host of option expiries layered around the figure level. That said, the US PCE price index will be a key risk event to watch for any potential action in the session ahead.
The dollar is keeping steady and somewhat little changed now against the euro, yen, pound and franc. However, it is trading lower against the commodity currencies. USD/CAD is down 0.2% to 1.2740, its lowest in three weeks.
Meanwhile, AUD/USD is trading up 0.6% to test its 38.2 Fib retracement level of the swing lower since April:

That is a key technical level to watch before the pair looks towards 0.7200 and then the 100-day moving average (red line), now seen at 0.7229.
NZD/USD is in a similar predicament, testing its own 38.2 Fib retracement level at 0.6529 on the day: