Dollar momentum stops at the end of last week
And we see the market remaining lukewarm over the new week despite hints of risk sentiment in the big picture.
The dollar retreated on Friday after meeting EUR / USD support at around 1.1967-76 and USD / JPY resistance at 105.57-65 at the time. Looking at EUR / USD currently:
The pair is trading above 1.2000 and this is a positive step for buyers after seeing the number level broken last week. The rebound comes after a test of the 100-day moving average (red line) and the 50.0 retracement level at 1.1971-76 now.
This puts a key line in the sand to mark any prolonged bearish momentum in the pair and this will be the region that buyers can rely on to define and limit risk.
Exploring the short-term chart:
The upward rebound also saw price push above its 100 hour moving average (red line) but stay below its 200 hour moving average (blue line). This means that the short term bias is more neutral now, as buyers have managed to regain momentum.
As such, the pair’s key range now falls between these two levels @ 1.2016-62. A downside breakout and sellers will re-establish a more bearish short-term bias, but cross an upside and buyers will reverse the trend to establish a more bullish short-term bias instead.
The dollar has had a strong run in recent weeks, but for now it is back to the drawing board as price action hints traders have hit the reset button.
Looking elsewhere, the USD / JPY stuck at the 200-day moving average and resistance around 105.57-65 is also keeping a lid on dollar gains for now.
That said, with potentially booming returns the dollar could get a second wind, but we’ll see if the market has an appetite for it as key technical levels have been called into question since trading ended last week.