The markets are consolidating and that clearly signals the shift that is coming our way! Investors are skeptic over the outlook and the conditions stipulate the change in market sentiment and direction, so the question now turns, is it the dollar's time for a comeback!?
We surely are asking this question and speculate it is the time for the dollar to build on the gains, especially as we see the index trying to hold its grounds above 80.00 critical levels! The start of the week is rather calm with the lack of major fundamentals and Europe is surely exhausted of news as nothing comes as a surprise for the market now, as clearly all they have been waiting for has been answered!
Greece will today be signed off with the bailout from the finance ministers; we already know that. The Brussels meeting will also result in reassuring comments that Spain will be capable to get their house in order yet that will only be a reminder to investors that Europe is far away from out of their dilemma and even as the sentiment is improving after Greece avoided a catastrophic default it is time to turn our eyes at growth disparities and that is the merits for dollar gains indeed!
The USDIX as we can see is starting to reflect this hesitation in the market and gains not just justified on haven demand, but also on a stronger recovery in the United States. The gains started with Bernanke downplaying the chances for QE once again and that was followed with upbeat data and as recent as Friday's positive jobs report that powered the dollar strongly. The gains are holding above 80.00 psychological barrier and keeping the index biased higher ahead of the FOMC decision tomorrow that is likely to confirm the recovery outlook.
The index is currently consolidating above SMA 20 and SMA 100 after bouncing from 38.2% Fibonacci retracement of the entire upside wave from 72.70 to the former high of 81.80 and that is supporting the upside move for the index for now.
Consolidation is seen across the board, and as well said downbeat trade figures from China triggered the fears again over the recovery outlook. The euro is hovering nearly flat, around the opening levels of $1.3122 areas and so far recorded the high near at $1.3155 and was more biased south setting the low of $1.3078.
As for sterling, the royal currency continued to surrender the gains to the dollar as the pair dropped to test the low of $1.5607 after setting the high of $1.5695.