And that comes after a key test of the 1.0500 mark last week, with the importance of the level underlined here. The bounce this week sees the pair nudge up closer to 1.0600 but is also pausing a little since overnight trading. That coincides with the 23.6 Fib retracement level of the swing lower this month, also seen at the figure level.
Besides that, offers layered at the 1.0600 mark are also in play for now and that is keeping the bounce in check. Looking to the near-term chart though:
We can more clearly see how the dollar momentum has stalled. That considering price action has now moved back above its 100-hour moving average (red line). As such, the near-term bias is now more neutral with price holding above that but below its 200-hour moving average (blue line). The latter is seen at 1.0633 currently. So, there is some slight room for price to extend higher before any threat to fully reversing the selling momentum.
As such, sellers i.e. dollar bulls will have a clear near-term level to defend in the sessions ahead to keep the post-election momentum.
This is a similar state to other dollar pairs, including GBP/USD, USD/CHF, USD/CAD, AUD/USD, and NZD/USD. All are seeing their price action keep in between the respective near-term levels as outlined in EUR/USD above as well.
That points to a pause in the dollar rally as traders catch their breath following the post-election run. We’re now in the period of reassessing that with Treasury yields also stalling following the recent upside. The best gauge in making sense of these momentum shifts will be to look at the charts as per the above.
This article was written by Justin Low at www.forexlive.com.
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