FXstreet,.com (Barcelona) - The Dollar has returned to levels around 99.00, after last weeks corrective move to 96.55; the Dollar has regained all the lost ground, and an attempt to take 100.00 psychological level seems likely.

However, Nicole Elliott, senior technical analyst at Mizuho Corporate Bank, warns about the overbought condition of the Dollar: The outlook for dollar/Yen has just become an awful lot harder although many economists are glibly talking as though a rally through the psychological 100.00 mark to 110.00 was a done deal. Having retraced 50% of the previous decline, and formed a 'doji' candle on the weekly chart, and with the US dollar overbought, we shall allow for another week of instability probably between 96.00 and 99.00.

Furthermore, Elliott advances the possibility of some more spikes low, if the Dollar remains below last week's high: The longer we hold below last week's high at 99.69, the sooner we should drop back to the 93.00 area. We also cannot rule out a very brief 'spike high' at 100.55 before a slide to 93.00. In this case one-month at-the-money implied volatility should creep back up to the 25.00% area.