The dollar climbed steadily yesterday to notch up only its third positive close in the last thirteen trading sessions. A variety of factors lifted the dollar against its main trading partners, varying from revived concerns about Europe’s banks to simple profit taking in euro long positions which had entered over-bought territory. Global equities traded lower for most of the day Monday which lifted the dollar as investor’s exited positions. We were looking for the dollar to break back across Friday’s low against the euro at 1.3620 to alleviate topside pressure, something the dollar has been unable to do thus far and as such leaves the current move as little more than consolidation after such sharp dollar losses, but the overall structure remains in place and as we mentioned yesterday we now favour the possibility of the index testing support at 75.00.
Looking ahead, the index has started brightly again today and if it can managed a second consecutive higher close it will be the first time since early September to put in two consecutive higher closes. Looking at the way investors normally taking holding patterns ahead of the NFP release we still favour only moderate moves for the dollar the rest of the week in either direction.
Written by Jonathan Granby, DailyFX Research Team
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