The dollar continues to gain back its grounds and advances for the second consecutive day after it slumped to its weakest in four months last week. The dollar regained its grounds amid the lack of major fundamentals in the market as investors continue to battle their inner demons over the aftermath of the unrest in the Middle East and where inflation will lead global growth!
The dollar index is hovering ahead of the US session around 76.75 trading at the highest today of 76.79 and the low of 76.35 compared to opening levels around 76.45.
The euro retreated against the dollar to trade below the marginal $1.40 amid profit taking and position squaring with the lingering debt woes and inflationary pressures that might derail a fragile recovery. The pair breached the minor support at 1.3925 and extending the downside move; Stochastic is oversold which might keep the volatility seen and help the pair rebound again to the upside with stability above 1.3860.
Sterling also declined to trade below 1.6200 areas amid profit taking, where the focus is still on UK and the awaited BoE decision this Thursday which is widely expected to maintain its currently monetary policy yet still did not prevent the market from expecting a surprise. The pair declined to record the lowest at 1.6139 and still trending lower and possibly will reverse higher as far as 1.6145-80 remains intact.
As for the Japanese yen, the USDJPY pair is trading around the SMA 50 affected by the positivity on momentum indicators and now approaching overbought areas which might support the reversal.