It was shaping up to be yet another tiresome week if not for Friday’s monstrous beat on US non-farm payrolls, which triggered a bid in the US Dollar Index and ended the week +0.5% higher.
Daily Resistance Cleared
Resistance at 103.62 on the daily timeframe saw its fair share of upside attempts since 17 January, a level sharing chart space with a 200-day simple moving average (SMA) at 103.55. In a one-sided move, Friday’s bid observed the aforementioned levels cleared (with resistance now marked support), opening the door to neighbouring resistance coming in at 104.15, followed by another layer of resistance at 105.04. As you can see from the chart, 104.15 has served well as historical support and resistance since mid-2023; therefore, we can expect a pushback if tested this week (perhaps prompting a retest of the breached resistance below at 103.62).
Any bullish scenario this week will be aided by the Relative Strength Index (RSI) rebounding from its 50.00 centreline (positive momentum) and the early uptrend formed from the late 2023 December low of 100.62.
Upside Backing on the Monthly Chart
The monthly timeframe displays a clear view of the longer-term trend, which, despite lacklustre movement since early 2023, is north alongside momentum remaining just above positive (> 50.00), as per the RSI. Nearby structures worth monitoring are the 2023 December low as potential support highlighted above and the 2023 October peak as possible resistance at 107.35. Outside of these lines, support at 99.67 (backed up by a moderate Fibonacci cluster nearby at 98.72) and resistance at 109.33 are on the radar.
Direction This Week?
Technically, two possible scenarios are on the table for the bulls this week.
First, the dollar unseats 104.15 resistance on the daily chart, giving the green light to breakout buyers to target resistance at 105.04. Second, the fact that 104.15 boasts historical significance, a rejection of the level could see dip-buyers enter the fold on any retest of the recently breached daily resistance-turned-support level at 103.62.
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