Dollar Hung Up on Resistance

by on January 6, 2014 6:09 am BST

The US dollar has been able to post large gains during the thin holiday trade given the relatively positive data. Kengo Suzuki, chef FX strategist at Mizuho Securities Co., said that “the dollar remains in the upward trend.” Suzuki also believes that the Fed will taper $10 billion in each of the next Fed meetings.

The dollar may be in an uptrend, but the conviction of traders behind the move could be weak. The dollar futures are hung up on intraday resistance on the 4H chart at 81.06. The last three 4H candles have been held under from further advances. A high-to-low Fibonacci retracement shows that support can be found at 80.942, or the 78.6 percent level. While this support is minor, a stronger price action support can be found at 80.825.

The Institute of Supply Management (ISM) services PMI and factory order data will be out prior to the US trading session. The Fed Chairman vote will be later in the afternoon, local time. Positive data will likely propel the dollar. A break above current price action resistance could shoot the dollar to 80.20/25, while the other scenario will test support levels.

4H Chart of DX

4H Chart of DX