The dollar moved within a narrow range in Asian / early European session on Monday, but near-term picture remains bearishly aligned, weighed by Friday’s 0.3% drop and formation of bearish engulfing pattern on daily chart.
Rising negative momentum adds to downside risk, though close within daily cloud (top lays at 104.65) and firm break of 10DMA (104.57) which kept the downside protected in past four sessions, is required to generate fresh bearish signal and expose next pivotal supports at 104.35/20 (Fibo 61.8% of 103.67/105.03 / daily cloud base/ bull-trendline, reinforced by 200DMA).
Conversely, repeated close above daily cloud top would ease immediate downside pressure and keep in play prospects for fresh recovery as rising daily cloud continues to underpin the upleg from 103.93 (May 16 low).
The US will be shut today for holiday and lower volumes may keep the action limited, with focus shifting on releases of German and EU inflation, as well as US Personal Consumption Expenditure price index, Fed’s preferred inflation measure, which will provide fresh signals to the US and European central banks and influence dollar’s performance in coming days.
Res: 104.77; 105.03; 105.15; 105.43.
Sup: 104.35; 104.20; 103.93; 103.80.
