The dollar was on edge as we started the new week here on Monday. But over the last few sessions, it has regained some composure and is now pushing back as we observe a couple of technical changes.
As highlighted in the linked post, the dollar was pushed towards some key technical boundaries in a bend but don’t break moment on Friday. And the fact it did not break down is what is helping to see a bounce so far on the week, amid a more push and pull mood.
In the case of EUR/USD, the pair ran up to test 1.0800 and its 200-day moving average on Friday. However, those levels held and now the pair is eyeing back-to-back daily declines for the first time since mid-April.
Meanwhile, AUD/USD tried to contest the key resistance region around 0.6634-50 going into the RBA this week. But amid a lack of impetus from the central bank, sellers held their ground and we’re now seeing a change in the near-term fortunes as well.
As for GBP/USD, the pair is down 0.3% to near 1.2470 currently:
GBP/USD daily chart
The jump higher on Friday and on Monday looks to be held back by the 50.0 Fib retracement level at 1.2596. And with price falling back below the 200-day moving average (blue line), sellers are back in control. Even more so now with a drop under 1.2500 and below both its 100 and 200-hour moving averages on the week.
There is some minor support next around 1.2550-65 but failing to hold which, will invite a potential look at the 1.2300 mark again.
That being said, we musn’t get too carried away on the week just yet. Amid a lack of drivers for traders to work with, there might not be moves that stretch out too far. The big consideration for any trending moves now will be having to deal with more US data next week.
We will have the PPI numbers on Tuesday, then the CPI and retail sales numbers on Wednesday. Those will be the big ones to watch and will serve to vindicate/invalidate any of the moves we’re seeing this week.