The US dollar has initially tried to rally during the trading session on Monday but found a bit of resistance at the 107.20 level. The market has more than enough support below to keep it afloat though, at least from what I see. I believe that market participants will continue to pay attention to the stock market, as it is a major influence on this pair. This be especially true the S&P 500, which I use is one of my tertiary indicators.
If we can break above the 107.50 level, the market could then go to the 110 handle. If we pull back from here, I believe there is a “hard floor” in this market at the 105 level, and this market although noisy, is continuing to consolidate in this region. We are at the top of this consolidation, so what we would need to see is some type of momentum to send this market higher. I believe that eventually we should get some help, and that might come in the form of easing tensions between the United States and China, which would be one of the best things that could happen the stock markets, and therefore it should send money away from the Japanese yen. I believe the volatility will continue, but I am more than willing to add to a core position if we can break above the 108 handle, as it would prove momentum picking up.
Written by FX Empire