Dollar firms again during European Session this morning, following the substantial retracement ahead of the New Year break.
On the 4 hourly time frame, the dollar index (DXY) rallied again after testing the downside uptrend line support. Although with less bullish momentum, the uptrend has not reversed yet. It is currently trading
above the level at 103.00 again, nears the previous highs. The bullish momentum is likely to be restrained at this level.
EURUSD hit a two-week high at 1.0652 on 30th Dec, yet it was followed by a retracement, as a technical correction after the substantial gain.
This morning we have seen the release of German Unemployment Change for Dec, was -17K, better than expectations of -5K, it was the best record since Jan 2016. Yet the figure failed to help EURUSD, as a result of the strengthening of the dollar.
EURUSD has plunged from the resistance level at 1.0490, testing the significant support line at 1.0400 then held, where provides a strong support. Yet the trend of EURUSD depends on the strength of the dollar.
The 4 hourly Stochastic Oscillator is below 30, suggesting a rebound.
The resistance level is at 1.0430, followed by 1.0450 and 1.0470.
The support line is at 1.0400, followed by 1.0380 and 1.0350.
We will see the release of the significant US ISM Manufacturing PMI and Prices Paid figures for Dec at 15:00 GMT this afternoon. It will influence the strength of the dollar and the trend of EURUSD.
Also keep an eye on the German CPI (YoY and MoM) figures for Dec, to be relased at 13:00 GMT, as it will also likely influence the strength of the Euro.