Headlines:Sterling tumbles on break below 1.3000, what’s next?Yuan fall not letting up towards the end of the weekUS sounded like it will consider the idea of joint FX intervention with Japan – reportEurope PMI recap: Services sector rebound masks continued inflation surgeUK March retail sales -1.4% vs -0.3% m/m expectedLagarde said to told ECB policymakers to hold back on dissenting views, leaksGermany’s Scholz: I don’t see how a gas embargo on Russia would end the warMarkets:JPY leads, GBP lags on the dayEuropean equities lower; S&P 500 futures down 0.2%US 10-year yields flat at 2.916%Gold down 0.8% to $1,935.50WTI down 1.2% to $102.52Bitcoin down 0.3% to $40,535It’s shaping up to be a typical April day in trading today, with bond yields rising, the dollar rallying, and equities looking more sluggish. That has been the sort of familiar theme we have been seeing as of late and today is no different.European indices opened lower, having to play catch up to the late plunge in US stocks yesterday but the overall risk mood is rather soft in any case. In FX, I would say the recent drop in the yuan isn’t getting enough attention as it should but that tends to correlate with a more risk averse narrative and a stronger dollar. That is precisely what we’re seeing.The greenback is continuing its good form as of late with EUR/USD falling from 1.0840 to 1.0790 while GBP/USD took a plunge after poor UK retail sales data, falling from 1.3020 to 1.2865 before keeping near 1.2900.USD/JPY was steadier, though it saw a drop to 127.75 after more intervention talk by Japanese officials. The pair then recovered back to keep near flat levels now around 128.20-40.Meanwhile, commodity currencies struggled heavily amid the more dour risk mood. USD/CAD is up 0.7% to 1.2670 while AUD/USD is down 0.9% to test 0.7300 with its 200-day moving average nearby.Elsewhere, gold is continuing its struggle as price is declining further after having neared the $2,000 mark at the start of the week. Price is down 0.8% to $1,935 at the moment.

The latest opinion poll sees Macron winning with 56% of the vote, having widened that gap before the first round of elections on 10 April. And the fact that the lead is being consolidated shows that markets could perhaps breathe a little easier during this week.Don’t get me wrong. Politics these days are never certain. Le Pen could bring about an upset and if she does, the euro is going to be reeling from the election result surely.Considering the technical vulnerabilities in the single currency against the dollar below 1.0800, it leaves exposed a potential drop towards the March 2020 low @ 1.0635.As for a straightforward Macron victory, I don’t expect much upside for the euro in France retaining the status quo. There might be a bit of a relief push (though I wouldn’t expect much) but I think the play might be to fade that as long as the dollar continues to hold firmer elsewhere alongside higher bond yields in general.I mean, if a more hawkish ECB pricing isn’t enough to get the euro buoyed this week, I’m not sure what else will.

The dollar is the frontrunner on the session, alongside the yen, as we continue to see the same old themes play out before the weekend approaches.
Higher yields, stronger dollar, and more sluggish equities seems to be the name of the game in April and not much will change before the FOMC meeting on 4 May in my view.
EUR/USD is pinned down 0.3% to test 1.0800 again, though recent lows close to 1.0760 might provide some additional support for the pair for the time being. But the downside for the euro is that it is seen struggling despite markets pricing in a more hawkish ECB. I’d argue that there is still the propensity for the central bank to disappoint come July.
Meanwhile, the pound is in freefall after a break below 1.3000 in cable. The next key support is the 50.0 retracement level at 1.2830 and the pair is still holding down 1% around 1.2890 currently.
USD/JPY is keeping rather flattish around 128.30 but that belies the more back and forth action from earlier with dip buyers stepping in after the pair fell to a low of 127.75.
Elsewhere, the aussie and kiwi are also pinned lower with AUD/USD breaking below some key support levels:

The pair has fallen past the 50.0 retracement level of its swing higher this year @ 0.7315 and also broken the trendline support during that move. The 200-day moving average (blue line) @ 0.7293 is the next key support level to watch.

The offshore yuan weakened to 6.52 against the dollar today, the lowest level since July last year.
Chinese policymakers sort of disappointed on expectations for a LPR cut this week but they are making up for that in supporting the economy through other means. The evident weakening of the yuan is one of that.
The Chinese currency is set for its biggest weekly drop against the dollar since the early days of the pandemic. And allowing it to weaken past 6.50 sets the stage for added weakness until we start to see local authorities step in.
The previous „range“ that Chinese officials were comfortable with was around 6.30 to 6.40. We’re off now to figure out where exactly they’d be happy to see the currency hold next. The March 2021 high just above 6.58 will be one to watch as a break above that could hint at the PBOC wanting a much weaker currency to bolster exports.As mentioned as well a few days back, the move here is also one to be mindful about as it also helps to provide a tailwind for the dollar in general.

It is said that Lagarde has told policymakers to hold back on criticism and dissenting views on policy decisions for several days. The move comes as Lagarde is said to struggle with the vocal dissent from more hawkish members and persistent leaks about the internal debate within the governing council.The sources note that Lagarde has told policymakers to present the majority view after policy decisions – which are on Thursdays – and hold back on „personal“ views until the Monday after.The supposed guideline also calls for policymakers to not leak details of internal discussions to the press but these are informal directions so policymakers aren’t exactly obliged to follow them.The sources reporting also adds that Lagarde’s effort above is not really going down too well with some members. One of the sources stated that:“Do you want leaks? Because this is how you get them. If people can’t speak openly, they’ll still talk but using different channels.“Well, with surging inflation pressures, it is certainly making it easy for ECB hawks to keep sniping at the central bank’s decision and guidance these days. You can’t blame Lagarde for wanting to control the situation but I fear it will not win her any friends considering how diverse and at times divided the ECB can be on these views.In part, it is also to strengthen the decision and statement put out by the central bank on the day itself. I mean how many times have we seen one thing from the ECB decision only for „close sources“ to leak out a different story a couple of hours after that?