The dollar was on the brink of a major breakdown last week but clawed its way back on Friday and Monday. The rebound was halted in trading yesterday but that puts us in a bit of a bind now, with fresh questions being asked of dollar sentiment at the moment.
Fed pricing continues to indicate one more rate hike on the horizon but the outlook for the year now reflects two rate cuts after that, instead of the three priced in on Thursday last week.
Markets are looking for more of a trigger to react further but after the slew of US data last week, we're not getting much to work with in trading this week. Even Fed speakers aren't offering much ahead of the blackout period that will begin on 22 April.
So far today, major currencies aren't showing much appetite after the dollar drop yesterday. Here's a snapshot of things and you can see how narrow ranges are still prevailing with little change all around:
When I say that we are headed back to the drawing board, it is exemplified by near-term price action in EUR/USD as the pair now sits in between both its 100 and 200-hour moving averages:
That indicates a more neutral near-term bias and there has to be a break on either side to vindicate the next momentum shift in the pair. To the upside, buyers will also have to look to firmly break above 1.1000 especially on the weekly close. Meanwhile, the 100-week moving average at 1.0935 and 50.0 Fib retracement level on the weekly chart at 1.0942 are still key downside levels to be mindful of ahead of the close later in the week.
