The pair stands at the back foot in early Friday’s trading, following sharp fall of over 100 pips late Thursday, which left new multi-month high at 113.17 and sidelined immediate bulls.
The greenback was hit by comments from US President Trump, who expressed concerns about dollar’s strength, which could put the US at a disadvantage.
Trump also showed worries Fed’s monetary tightening and potential impact on the US economy.
Combination of negative news and overbought techs sent the greenback significantly lower and completed Doji reversal pattern on daily chart, signaling further weakness as strong bullish sentiment weakened.
Thursday’s drop violated key near-term supports at 112.19/06 zone (16 July trough/Fibo 38.2% of 110.27/113.17) but failed to close below on first attempt.
Supports are reinforced by rising 10SMA (112.15) and sustained break lower is needed to confirm reversal and open way for further retracement of 110.27/113.17 upleg.
Daily RSI and slow stochastic reversed from overbought territory and head south, supporting scenario along with weakening momentum.
Break below 112 handle could extend weakness towards next strong supports at 111.38/28 (Fibo 61.8% / rising 20SMA).
Only return and weekly close above 113 handle would neutralize downside threats and shift focus higher.
Res: 112.62, 113.17, 113.38, 113.63
Sup: 112.05, 111.72, 111.38, 111.00
