The dollar index remains constructive at the start of the week, following Friday’s jump on robust US November labor data.
The greenback benefited from higher than expected US NFP and unemployment below consensus in November, which signaled that labor market remains resilient and softening narrative about rate cuts.
However, recovery faces headwinds from pivotal barrier at 104.10 zone (Fibo 38.2% of 106.96/102.36 / falling daily Kijun-sen / top of recent range) with firm break here needed to signal bullish continuation and expose targets at 104.66/94 (50% retracement / daily cloud base).
Bullishly aligned daily studies support this scenario, however repeated failure to register a clear break higher to signal prolonged consolidation, but with bullish bias above 103.50/57 (converging 10/20 DMA’s and on track to form bull-cross).
Caution on loss of 200DMA (103.33) which would weaken near-term structure and signal an end of near-term recovery phase.
Markets look for fresh signals from US inflation report (due on Tuesday) with inflation expected to ease further in November and Fed rate decision on Wednesday (the central bank is widely expected to keep rates unchanged in its December’s meeting).
Res: 104.12; 104.36; 104.66; 104.94.
Sup: 103.90; 103.50; 103.33; 103.19.
