The push higher last week fell short at the final hurdle, with the dollar recovering well amid a selloff in equities. The push and pull is continuing this week with stocks falling yesterday and the dollar having firmed earlier amid a more risk-off transition from Asia after the BOJ tweaked its yield curve control policy.
But as we saw US futures pare losses, the dollar has also lost ground on the session with EUR/USD now up 0.2% to 1.0625 on the day.
This sees price action keep just above the key trendline resistance (white line) at around 1.0580 as well as the 38.2 Fib retracement level of the swing lower since January last year, seen at 1.0610.
Those remain the two key levels to watch with buyers also putting up a modest defense of the 200-hour moving average, seen at 1.0594 currently.
As mentioned earlier in the week, any moves during this period will be tough to read amid thinner liquidity conditions and the best is to try and weigh up any changes in dollar sentiment to how risk trades are behaving - specifically stocks.
For now, equities have recovered some decent ground after the selling pressure hit in Asia but as we have seen over the past few sessions since late last week, Wall Street is a tough crowd to convince and the mood isn't really helped by a struggling technical outlook as seen here.
