Dollar pullback stalls as the risk sentiment is more negative
The greenback is keeping firmer and is reversing some of its declines from last week, with EUR/USD slipping back below 1.2100 and notably below its 100-hour moving average @ 1.2106. That sees the near-term bias switch to being more neutral again.
Elsewhere, the drag on the pound in cable is also helping to feed into added gains for the greenback as the pair is on the march towards 1.3200.
USD/CAD is also reversing a drop below 1.2800 to 1.2830 while the antipodeans are also seeing a modest retreat to start the week, with AUD/USD back below 0.7400 and NZD/USD closing in on the 0.7400 handle currently.
Both AUD/USD and NZD/USD are taking out their respective key hourly moving averages on the way down and that could spell a deeper correction in the near-term.
As mentioned before, the short dollar trade is starting to be more of a consensus trade in the market but those can always be dangerous to strong pullbacks/corrections.
We are approaching year-end trading and rebalancing flows are also part of the equation after the strong November rally, and even stronger risk rally since April.
There might still be room for some risk buying later in the week with the US FDA set to approve Pfizer's vaccine; although one can argue that it should be priced in.
However, for now, sentiment is starting to shift a little to the defensive side. It isn't going to change the picture narrative but it is something to be mindful about.
