With the Fed in focus, traders are not seemingly settled as yesterday's early gains in the dollar failed to hold as price action ran back the other way towards the end of the day. That came amid a recovery in equities while Treasury yields did keep higher, reflecting some mixed tones in markets in general.
A plausible factor that is in play right now is that perhaps the dollar is running up against key technical levels across the board. In some sense, the bulls need added impetus to really chew through that layer of resistance in order to pull off the next leg higher in the greenback. However, it looks like we will need the Fed to settle that this week and to provide more clarity before any real commitment. Here's a look at the charts to give a better overview.
USD/JPY is finding it tough to breach 145.00 with barrier options also reported at the figure level. That said, buyers are keeping the faith and holding around 142.00 to 143.50 for the most part in recent sessions.
Meanwhile, EUR/USD continues to stick closer to parity with little appetite to drive the next downside leg firmly below 0.9900. Then, GBP/USD is also still holding at weekly support near 1.1400 - a key support region as defined by the pandemic low:
Looking over to the commodity currencies..
AUD/USD is also knocking on the door of its weekly trendline support at around 0.6681 - which also coincides with the 14 July low at that same level. Put together, that is a key support region to watch as a firmer break will spell out a move towards 0.6500 next potentially.
Then, there was the impressive break in USD/CAD at the end of last week above 1.3200 and that straight away pushed buyers into testing the 50.0 Fib retracement level at 1.3337. That is ultimately still holding for now and will be a critical point to watch in determining the next trending move for the pair as clearance would pave the way towards 1.3400 and potentially the 61.8 Fib retracement level at 1.3651 next for the pair.
All of this comes as 10-year Treasury yields are running up against a key level of its own i.e. 3.50% on the charts:
That put a lid on the topside push back in June and with the Fed in focus, it is a key psychological level in determining the next range so to speak for yields to settle around in the aftermath.
