The conditions were all lining up on Friday up until a drop in Treasury yields ultimately proved to be the turning point for a potential technical breakout for the greenback. 10-year Treasury yields hit a high of 3.92% in Europe but ended the day over 4 bps lower at 3.82% and that was what dragged down the dollar.
The US currency came close to posting multiple key technical breakouts but they all ended up falling short. A case of close but no cigar. I'll let the charts do the talking:
USD/JPY was perky in European trading on Friday, knocking on the door of the 135.00 handle. However, the daily close fell short of breaking the key level and also dropped below the late December and January highs around 134.50-77 and that continues to keep sellers interested at least.
That said, the pair is still keeping the momentum of its recent bounce and the semblance of the inverted head and shoulders pattern pointed out here is still intact. So, that will be a consideration for trading this week.
GBP/USD looked to carry on its drop under 1.2000 at the end of last week but support from its 200-day moving average (blue line) proved to be enough for a turnaround. The reversal in price action was of course also helped by the dollar's slump amid the drop in bond yields.
But for now, the confluence of the 100 (red line) and 200-day moving averages will act as key support levels looking into trading this week.
USD/CAD came close to breaching its 100-day moving average (red line) but was ultimately thwarted with the 19 January high at 1.3520 also providing some added daily resistance. As such, those will continue to be key levels to watch for any potential upside push that may follow later in the week.
AUD/USD looked like it was bound for a major test of key technical support after a supposed break below the 19 January low of 0.6870. However, the reversal in momentum late on Friday saw dollar gains evaporate and the level held - at least on the daily chart - with buyers also holding their ground after a close push towards the 200-day moving average (blue line).
NZD/USD was in a somewhat similar spot as it ran up against support from its January lows at 0.6190-00 before the tide turned against the dollar. The pair also ran close to a test of its own 200-day moving average (blue line) but sellers ran out of steam amid the dollar reversal.
As such, the lows pointed out above as well as the confluence of the key daily moving averages will continue to act as key support levels to watch in limiting the downside momentum moving forward.
