The US dollar initially rally during the trading session on Monday, reaching towards the 113.40 level. We fell from there and broke to the 113 handle. As an area that has been important in the past, so it doesn’t surprise me that we have seen a bit of a reaction. If we continue lower, I think there is even more support underneath that the 112 level. We have recently been bullish, and I don’t see that changing overall, but I recognize that it might be noisy. After all, this market does tend to be very volatile, and that of course will change anytime soon. It is a “risk sensitive” market, as the US dollar tends to rally against the Japanese yen when stock markets do the same.
I recognize that the 114 level above is resistance, just as the 114.50 level is, and even more resistive, the 115 handle above all of that. Once we break above that level, it is more of a “buy-and-hold” situation, but until then I think that you can buy on short-term dips. Gives you an opportunity to add slowly to and build a large position as this pair looks as if it is winding up to pick up speed. It’s not until we break down below the 111 level that I would be concerned, although I think noise is going to be a major issue.
Written by FX Empire