Dollar holds firmer to start the day

With the BOJ and ECB done for the week, the market focus will slowly shift towards the Fed ahead of the FOMC meeting next week. The dollar is finding itself in a modest spot as it keeps a hold of key technical levels on the week.

The euro failed to muster a strong rally even after the ECB delivered a 50 bps rate hike yesterday and that says a lot about the tepid sentiment surrounding the euro. But the dollar side of the equation is also holding up today and price is trading just below 1.0200 currently:

EURUSD D1 22-07

The fact that buyers failed to really contest the 50.0 Fib retracement level at 1.0283 this week shows that the pair may be poised to fall further now that we have gotten past the ECB hurdle with little to be too cheerful about.

Meanwhile, GBP/USD is down 0.2% on the day as buyers continue to struggle to hold a break above 1.2000 though key near-term levels are still intact for the time being:

GBPUSD H1 22-07

The 200-hour moving average (blue line) at 1.1920 currently will be one to watch in defining the near-term bias for the pair and if sellers have the appetite to chase a push to the downside.

Elsewhere, with risk sentiment a little more sluggish today, the aussie and kiwi are also sitting lower with AUD/USD down 0.2% to 0.6915. There are large expiries for the pair around 0.6900 so that could offer some attraction for price action before rolling off.

Meanwhile, USD/JPY is looking to try and work towards 138.00 again but the state of play will depend on the bond market. After the ECB yesterday, yields fell heavily and that saw the pair suffer a bit of a drag but we are seeing a slight recovery today. That said, price action is still largely caught in a wider range between 137.00 (broken resistance, now turned support) and 140.00 (key psychological resistance) for the moment.

Michael Cooper

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