The dollar was firmer in early Monday’s trading and sidelined immediate downside risk on break through 100SMA pivotal support (108.85) following past two day’s close in red after strong rally showed signs of stall.
The greenback pulled back from new eleven-week high at 109.53, dragged by lower US yields which slipped from new high above 3%, but dips were so far shallow and failed to generate stronger reversal signal on overbought studies.
The pullback so far looks like consolidation of strong rally, with broader bullish bias expected to stay intact while 100SMA holds.
Progress in Korean peace talks keeps safe-haven yen under pressure, giving fresh momentum to the greenback.
Bullish daily techs are supportive, however, risk of pullback exists as slow stochastic is reversing from overbought territory.
Busy week is ahead and dollar will be looking for fresh signal from a number of economic indicators, scheduled this week.
Immediate focus turns on today’s release of US PCE price index which is Fed’s favorite inflation gauge, as FOMC two-day policy meeting starts on Tuesday.
Recent highs at 109.50 zone mark initial barriers, followed by 109.68 (Fibo 50% of 114.73/104.62 fall), break of which is needed to generate fresh bullish signal for attack at psychological 110.00 barrier and 200SMA (110.22).
Conversely, stronger bearish signal could be expected on firm break below 100SMA (108.85) which would expose strong supports at 108.42/37 (Fibo 38.2% of 106.61/109.53/rising 10SMA).
Res: 109.50, 109.68, 110.00, 110.22
Sup: 109.00, 108.85, 108.42, 108.25
