The dollar suffered quite a heavy meltdown in trading yesterday and there are some key levels to take note of in the charts right now. EUR/USD in particular is seeking a stronger rebound after bottoming out in early October, as it climbed back above 1.0800 to 1.0870 levels at the moment.
The surge higher yesterday not only broke the 38.2 Fib retracement level at 1.0764 but it also took out key resistance in the form of the 100 (red line) and 200-day (blue line) moving averages for the pair near the 1.0800 mark.
That now sees the trading bias shift back to being more bullish and tees up the potential to revisit the 1.1000 mark next.
You can argue all you want about the outsized reaction to just a slightly better inflation report yesterday but there's no arguing with the technicals. That is one thing that all traders should at least respect and pay attention to.
Besides this, GBP/USD is also knocking on the door of 1.2500 with its own 100-day moving average sitting just above that at 1.2512 and AUD/USD is also eyeing a break above its own 100-day moving average near the 0.6500 mark - which has been a critical level in keeping the pair down.
I'll get into the individual charts later but put together, it could signal a further breakdown in the dollar if other pairs also start to push the boundaries and match up with EUR/USD above.
