Higher bond yields and a surging dollar makes is seeing the pair lead the way in the major currencies space, in terms of signaling the market move this week. It came with a break above the 11 January high of 132.87 and buyers have not let up with price now finally poised to test the 135.00 mark before the weekend.
If sellers can keep below that, there might be some gas in the tank left to try and push for a return to the downside. Otherwise, we might just see a strong squeeze higher with the 100 (red line) and 200-day (blue line) moving averages next in line at 137.64 and 136.90 respectively.
There is also a semblance of an inverse head and shoulders pattern forming, which could target 142.00 next on the charts.
For now, it is all about following the market mood and we are going back to the idea of buy the dollar, sell everything else as broader markets look to price in a more aggressive Fed in the months ahead.