The greenback remained on the back-foot at the start of a new trading week, with the key US Dollar Index dipping below the key 100.00 psychological mark to multi-week lows on last week's less hawkish Fed. Market expectations over the Fed's near-term monetary policy outlook would continue to be a key driver as spotlight turns to a busy week of Fed-speaks, including the Fed Chair Janet Yellen.
Today’s economic docket lacks any major fundamental drivers and hence, is unlikely to provide an immediate respite for the US Dollar bulls.
The pair remains well supported by a hawkish BoE twist and is now aiming to break through an important confluence resistance near 1.2400-10 region, comprising of 100-day SMA, a short-term descending trend-channel resistance and 50% Fibonacci retracement level of 1.2706-1.2109 recent downslide. A convincing strength above this immediate strong hurdle would confirm a break-out and is likely to accelerate the up-move towards 61.8% Fibonacci retracement level resistance near 1.2475-80 region.
On the downside, 1.2370-60 area is likely to protect immediate downside. Failure to hold this immediate support, leading to a subsequent drop below 38.2% Fibonacci retracement level support near 1.2340 level, would reaffirm movement within the descending trend-channel and is likely to drag the pair back towards 23.6% Fibonacci retracement level support near mid-1.2200s with some intermediate support near 1.2290-85 area.
Growing speculations that ECB might consider raising interest-rates by the end of this year, coupled with the outcome of Dutch elections, has been lending supporting the shared currency. After Friday's brief corrective pause, the pair regained traction and is now headed back to over 1-1/2 month highs touched in the previous session.
Bulls would be aiming to clear Friday’s swing high resistance near 1.0775-80 region, above which the pair is likely to surpass the 1.0800 handle and dart towards 1.0820 resistance area, representing 50% Fibonacci retracement level of 1.1300-1.0341 downfall. Momentum above the said resistance is likely to get extended further towards testing the very important 200-day SMA hurdle near the 1.0900 round figure mark.
On the downside, 1.0735-30 area now seems to have emerged as immediate resistance and is closely followed by 38.2% Fibonacci retracement level support near the 1.0700 handle. Sustained weakness below 1.0700 mark seems to drag the pair towards 100-day SMA support near 1.0660-55 region, below which the pair seems more likely to give-up 1.0600 mark and slide towards 23.6% Fibonacci retracement level support near 1.0565-60 region ahead of the key 1.0500 psychological mark.
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