Pullback from new 20-year high likely to stall as overall picture is firmly bullish
The dollar remains in red on Tuesday, weighed by renewed risk appetite, down 3% from new 20-year high at 114.72, posted last week.
Monday’s weaker than expected numbers from US manufacturing sector in September added to negative near-term outlook, but the impact is likely to be short-lived as the largest world economy is still in a good shape, with expectations for further aggressive steps by Fed to maintain support and keep the dollar attractive.
Markets await for results from key US labor sector indicators (private sector is expected to add 200K new jobs in Sep from 132K in Aug – ADP and non-farm payrolls are expected to rise by solid 250K, following 315K rise last month), with solid numbers in September to offer fresh support to the greenback
The pullback cracked 38.2% retracement of 104.49/114.72 upleg, reinforced by 20DMA (110.84) facing headwinds there, as stochastic is deeply oversold on daily chart.
Extended dips should find ground above psychological 110 support to keep larger bulls intact for fresh push higher.
Res: 111.81; 112.25; 112.51; 113.26
Sup: 110.81; 110.23; 110.00; 109.61