Despite technical indicators flashing bullish signals, the US Dollar was driven by strong downside momentum on Monday. During this time, the pair managed to breach the 100– and 200-hour SMAs and the prevailing seven-week channel circa 107.20.
On Tuesday morning, the nearest support was set by the weekly S1 and the 23.60% Fibonacci retracement at 106.75 and a two-week support level at 106.66. The pair is expected remain in the 106.70/107.20 range during this session. It could still edge lower within the following hours prior to reversing northwards and testing the breached moving averages.
The southern barrier should hold firm, while the 107.10 area might actually surrender under the bullish pressure if solid US fundamentals add some upside volatility to the market.
