Bounce to offer selling opportunities while capped by converging 10/20DMA’s
The pair started week with gap-lower and fell to new nearly three-year low at 104.44 in Asia, before bouncing.
Buying dips below 105 handle by Japanese importers and the latest news that China asked to return to negotiating table, revived risk mode and pushed the greenback higher.
January’s flash crash low (104.59) and March 2018 low (104.62) offered solid support, keeping the downside protected for now.
Daily studies remain bearish and keep near-term risk at the downside, however, news may play key role and drive the pair in either direction.
Overall sentiment has significantly weakened after signs of trade war escalation (the pair was down 1.4% on Friday), with failure of two sides to bring the situation under control on fresh talks, expected to spark fresh safe-haven buying and risk eventual break below key 104.62/59 supports.
Conversely, more optimistic tones would lift dollar on fresh risk appetite, with stronger bullish signals expected on break above pivotal resistances at 106.20/44 zone (10DMA / Fibo 38.2% of 109.31/104.44 / 20DMA).
Res: 105.95; 106.20; 104.44; 107.00
Sup: 105.16; 105.05; 104.62; 104.44