The dollar index closed only 0.10% below 94.10, trimming to 94.08 in a quiet Asian session. The dollar index is now back in the centre of its 93.50 to 94.50 range. Notwithstanding higher US bond yields, the technical picture implies that resistance about 94.50 became more impressive following multiple forays were checked ahead of it last week.
The CFTC Commitment of Trader’s Report noted that US dollar longs are running two-year highs. That is as great a sign as any that uncertain momentum has decreased over the end of the last week. The higher US dollar/Fed-taper story and higher yields will present an underlying bid on dips. But it would not be a surprise in the least if the US dollar idled this week on the softer side cull some of the heavily overweight uncertain long interest.
In the G-10 space, EUR/USD proceeds to mark time, increasing slightly to 1.1580 in Asia. EUR/USD, however, seems vulnerable to another move above in US yields. However, a break of 1.1550 or 1.1650 is expected to signal a new directional move. Sterling exceeded the following two Bank of England officials indicated an earlier rate hike could happen over the weekend. The November BOE meeting will be exciting now as inflation pressures mount that doesn’t seem transitory anymore. GBP/USD increased 0.37% to 1.3665 yesterday, well over the 1.3615 pivot point. A rally within 1.3700 could spark a short-squeeze to 1.3800, while GBP/USD now seems well established into 1.3600.
USD/JPY Is on The Move Following Us Yields Climbed on Friday
On Friday, USD/JPY increased 0.54% to 112.25, surging by added 0.38% to 112.65 in Asia. The offender is the US/Japan yield differential, which will drive the cross’s direction. Those forces will proceed with the US in taper mode, drive up US bond yields, and Japan is looking to start the fiscal taps, backed by an ever-dovish Bank of Japan. USD/JPY seems set to test longer-term resistance between 114.00 and 114.50, while falls to 111.00 will be well supported. Massively short yen positioning in the US futures may restrain USD/JPY gains initially, however. USD/JPY seems like an actual buy-the-dip candidate, nevertheless.
With Asian markets brimming with faith today, the sentiment-driven AUD and NZD have increased to 0.7330 and 0.6735 today. AUD/USD has exceeded, rising 0.35% as Sydney’s reopening and firm commodity and energy prices flow within the currency.