Price is trading just above the 200-hour MA (blue line) again near 108.60 in an exact repeat of the start of European trading yesterday. Buyers are in near-term control but they continue to lack the drive to extend the upside momentum as markets remain a bit cautious despite some improvement in global trade tensions.
Overnight, we saw US equities finish higher but near their lows and that indicates some nervousness still present among investors for the time being. With Treasury yields also trading more flat today, I reckon it's giving reason for buyers to not get too carried away as we begin the new week.
They did however defend the 100-hour MA (red line) yesterday and earlier today, which shows that they are poised to stay in near-term control. Hence, that level @ 108.36 and the 200-hour MA @ 108.50 will be key downside levels to watch out for today.
Not to mention, there's also large expiries rolling off at 108.50 too which could play a part in anchoring price action amid calmer tones today.
As for upside levels, they remain similar to yesterday with further resistance seen around 108.87-90 before offers at 109.00 come into play. That is if price action starts moving away from the 38.2 retracement level and yesterday's highs around 108.62-72.
Looking ahead, the focus of the pair will remain on global trade tensions as we'll have to see if Mexico will play ball to avoid tariffs and if Trump and Xi are set to meet at the G20 summit to help alleviate fears that we're headed towards an all-out trade war.