It has been a poor start to the new year for the dollar but the bulls managed to draw a line in the sand to the declines late last week. The move was helped by the strong US jobs report and after a bit of a recovery, we are starting to see that momentum wane since late yesterday.

As things stand, we're sort of caught in a position where there isn't much to lean on in terms of the technicals for dollar pairs at the moment. The charts will better explain the situation.


For EUR/USD, sellers defended the 1.1000 mark and on the weekly outlook, they also defended a firm break above the 50.0 Fib retracement level of the downswing since 2021 at 1.0942. Adding to that, there is also key resistance just above the 1.1000 mark in the form of its 100-week moving average (red line) at 1.1058 currently.

Those are all key upside levels to watch and buyers require a break above that to really extend the momentum towards 1.1200 next.

But the recent drop perhaps has more room to extend further, with the corrective move seeing little in the way before a potential drop towards the first week of January low near 1.0500. That means EUR/USD has roughly a 500 pips range to play around now and price action is right smack in the middle of that.


Looking over to GBP/USD, the pair has failed to try and get above its December highs at 1.2443-46 with little help from the BOE. Amid the recent dollar rebound, it has fallen back to just under 1.2000 yesterday before recovering a little to near 1.2100 today.

The resistance noted above is the key upside level to watch for any extension higher while downside momentum remains contained unless sellers can breach 1.2000 and the 200-day moving average (blue line) at 1.1945. Those are the battle lines for cable at the moment.


Meanwhile, USD/JPY has essentially closed the gap higher from the start of the week after the retreat yesterday. The jump higher on Monday struggled to get above the 11 January high at 132.87 and sellers are capitalising to try and keep the downside momentum running.

For now, the pattern of lower highs, lower lows is somewhat still intact and I would argue that it would require buyers to break 135.00 to really invalidate that sequence.


Then, we have AUD/USD which saw its strong gains since the turn of the year limited by the August highs at 0.7125-36. Since then, it has been a sharp retreat to below 0.6900 at the start of this week before recovering some poise in the past few sessions to try and look towards 0.7000 again.

However, key resistance still resides in the August highs as noted above while short-term support at 0.6855-70 will be one to watch before the 200-day moving average (blue line) comes into play at 0.6805. That essentially leaves a roughly 300 pips range for the pair to roam around and again, we're more or less right in the middle of that at the moment.

To sum up, the dollar selloff since the start of the year has encountered a pause but the greenback itself is unable to keep the rebound going in the last few sessions. That is leaving for a bit of a power struggle in the technicals for now, with there being little key levels for traders to lean on for a fresh conviction.

In short, FX traders could really use with a trigger or some more convincing market flows to really guide the playbook at the moment. And we might not get there until the US CPI data next week.