Technical Analysis

Dollar holds steady, trades more mixed so far on the day

The greenback was dragged lower slightly earlier after a report on China considering to reduce its inbound COVID-19 quarantine period from 10 days to 7 days but it has since recovered well to keep steadier in European morning trade. We did see USD/JPY move up to hit 150.00 for the first time since August 1990 and price is still keeping just below that now as traders remain cautious.

EUR/USD is up just a touch around 0.9780 levels as price action remains rather limited in between its key hourly moving averages:

Large expiries at 0.9800 are also adding to a layer of resistance for the pair alongside the 100-hour moving average (red line) at 0.9795. Meanwhile, the 200-hour moving average (blue line) at 0.9756 is the key near-term support level to watch for the time being. A break below that will open the pathway towards the 13 October low again at 0.9631.

Elsewhere, cable caught a spike earlier on the China headlines to 1.1240 but is now settling down to near the lows for the day as price runs into a test of its 200-hour moving average:

A fall below that will allow for sellers to take a run towards 1.1000 next potentially as the pound continues to look short of confidence with the UK outlook being rather bleak – both politically and economically.

Meanwhile, commodity currencies are also looking sluggish against the dollar as S&P 500 futures keep down by 0.5%. 10-year Treasury yields are up 4 bps to around 4.17% and that is also keeping the pressure on stocks so far on the day.

USD/CAD is little changed at 1.3760 while AUD/USD has recovered well to trade little changed around 0.6275, off earlier lows of 0.6230 after a poor Australian jobs report. On the latter, overall sentiment continues to favour sellers with price action keeping below the confluence of its 100 and 200-hour moving averages at 0.6276-80 for now.

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