The pair is holding near session high at 113.32 in early European trading, following strong rally in Asia. The greenback was boosted by increased optimism about US tax reforms after the US Senate approved a budget blueprint for the 2018 fiscal year that opens way for Republicans to continue with Trump’s tax-cut plans without support from Democrats.
The dollar also received support from speculations of successor of Janet Yellen as Fed chair person, as President Trump favors more hawkish person at that position.
Japan’s general election is on Sunday and market observers expect no surprises for the market as Japanese PM Abe’s ruling coalition is on track keep the majority in the lower house.
Bullish technical studies point at the upside as fresh rally cracked key resistance zone between 113.25 and 113.43. Sustained break here would spark fresh extension of broader uptrend from 107.31 (08 Sep low) towards targets at 114.00/50.
Hesitation at key barriers could be anticipated as slow stochastic is entering overbought territory which may result in consolidation before bulls resume.
Initial supports at 113.00/112.70 are expected to ideally contain dips, while extended downticks should find ground at 112.50 (session low / converged 10/20SMA’s / 4-hr cloud top).
Conversely, firm break here would sideline near-term bulls for prolonged consolidation.
Res: 113.86, 114.00, 114.50, 114.80
Sup: 113.00, 112.70, 112.50, 112.03
