Yesterday in European trading the dollar tried to stage a rally but it could only muster a couple dozen pips. As the bounce flattened out, dollar bulls seemed to say “is that it!?” and started unloading dollars. There’s a danger of something similar today especially if new home sales numbers at the top of the hour disappoint.
The stiff USD/JPY offers up to 100.40 (with more at 100.50) are keeping a lid on the dollar. The rest of the market doesn’t want to get involved until that breaks and already there are signs of a lack of conviction. Cable has bounced without a serious test of 1.5300 or the 55-dma just below.
The dollar is due for a bounce but if this is the best it can do, don’t expect continued gains for the rest of the week.
