The pair moves lower in early Tuesday following strong downside rejection at new multi-year low and subsequent 1% advance on Monday, on renewed optimism in US-China trade conflict.
The market was highly volatile in past two days on dramatic turns in trade war saga, which sparked quick changes between risk-off and risk on mode.
Today’s fresh weakness comes after markets digested the latest news and tempered initial optimism about continuation of trade talks.
The pair is expected to fully depend on development in trade conflict story, but may stay stuck within the range as Japanese exporters are sellers from levels above 106 while importers’ bids lay below 105, until stronger direction signal will be generated.
Daily studies remain in bearish configuration and favor further weakness for retest of key supports at 104.62/44 zone, violation of which would risk stronger bearish acceleration.
Falling and converging 10/20DMA’s (106.14/32 respectively) mark upper pivots, firm break of which is needed to shift near-term focus higher.
US Consumer Confidence data are in focus as key event for the dollar today.
Res: 106.14, 106.32, 106.73, 106.97
Sup: 105.59, 105.25, 105.05, 104.62
