The dollar momentum grinds to a halt at the end of last week
And we are seeing the market keep more tepid in the new week despite hints of risk-on sentiment in the broader picture of things.
The dollar retreated on Friday after running into support in EUR/USD at around 1.1967-76 and resistance in USD/JPY at 105.57-65 at the time. Looking at EUR/USD currently:
The pair is trading back above 1.2000 and that is a positive step for buyers after having seen the figure level broken last week. The bounce comes after a test of the 100-day moving average (red line) and 50.0 retracement level @ 1.1971-76 now.
That puts a key line in the sand to mark any extended downside momentum in the pair and that will be the region in which buyers can lean back on to define and limit risk.
Drilling down to the near-term chart:
The bounce higher also saw price push above its 100-hour moving average (red line) but keep below its 200-hour moving average (blue line). That means the near-term bias is more neutral now as buyers managed to wrestle back some momentum.
As such, the key range for the pair now is between those two levels @ 1.2016-62. Break lower and sellers will reestablish a more bearish near-term bias but break above and buyers will turn the tide to establish a more bullish near-term bias instead.
The dollar has had a good run in recent weeks but for now, it is back to the drawing board as price action hints that traders have pressed the reset button.
Looking elsewhere, USD/JPY stalling at the 200-day moving average and resistance around 105.57-65 is also keeping a lid on dollar gains for the time being.
That said, with yields potentially breaking out, the dollar may potentially get a second wind but we'll see if the market has appetite for that as key technical levels are being called into question since the end of trading last week.
