Overnight trading sentiment changed swiftly toward the dollar index as the European equity markets opened a live session that was unable to hold the long momentum built from the previous period of trade.
The consequence was an automated move out of crude oil, out of S/P futures, and out of the major currencies that took half of the previous session's gains back. The oversold bounce from the dollar in the near-term now has to prove it has depth and strength to hold, and judging by the sporadic nature of major pair movement that is questionable.
There just does not seem to be the same desire to be long-USD this week as there was right up to the latest non-farm payroll release.
The numbers of note will be 1.2250 support on euro, 1.1390 resistance on swissy, 1.4750 support on cable, 0.8550 support on cad, 91.50 resistance on yen, and 1.0305 swing point on cad.
Until a session can close above or below each of those areas the majors may just spin their wheels, waiting to see whether S/P futures trade can close above or below 1050.
Long-S/P will move the dollar index back down to 86.20, while Short-S/P will allow a test of 87.00. Take care jumping into the long side of the USD; Wall Street trade may just have something to say about that.
Marco Hague is one of the founders and principals of The London Forex Broadsheet (commonly known as TheLFB), a global forex trader portal with headquarters in the U.S. Hague began his career with the Bank of England dealing with foreign exchange control, and he has been trading for the last three decades. He has been involved with institutional risk asset ratio analysis and the implementation and maintenance of institutional trade desks globally.