EUR/USD touches a high of 1.1428 on the day as the dollar stays weak ahead of European markets open
Price is already surpassing the overnight high of 1.1424 and is now looking towards minor resistance from the 25 October high @ 1.1432. Break above that and minor resistance is then seen around 1.1450 before a move towards 1.1500 will be on the cards.
The dollar isn't looking too hot again as we begin the new session and the renewed optimism surrounding a US-China trade resolution isn't going to help in my view. Here's why:
- It's spurring more short covering in AUD/USD and NZD/USD
- It's lifting the Chinese yuan
- It's helping to provide relief to Asian currencies and move flows out of the dollar
Flows like that are hard to ignore and couple with the weak performance yesterday, the backdrop isn't exactly dollar supportive right now in my view.
However, the one positive thing that could help EUR/USD sellers today is that there is some resistance around 1.1423 from the 23.6 retracement level. But as buyers shown above, they are poised to keep up the near-term bullish bias - as they held the 200-hour MA @ 1.1390.
That signals that there is still conviction to build for a move higher and with flows looking to move against the dollar, it's hard to argue a case for a move back down unless price starts to threaten the 200-hour MA again.
There is risk to come from the US jobs report later but barring any major blowout in wages, it's hard to see the dollar retain any upside as long as key technical levels are still supportive for a move lower in the greenback.
