Major two-sided action today, but USD gains might not hold

January 6, 2017 2:20AM CST

March Dollar: While the USD is showing some initial strength, we have to think it remains technically and fundamentally vulnerable to more declines ahead.  In fact, strength in the Chinese currency this week is clearly a fresh major negative influence on the dollar and that in turn might require something definitively positive from the US data front.  As in other financial markets, we think USD bears are likely to retain control unless the numbers today can be judged as stronger than expected.  Over the last two trading sessions the dollar was unable to capitalize on decent data and therefore, USD bulls might need stellar data just to slow the descent on the charts.  All in all, the trend in the dollar is lower, unless there is a surprise “beat” number this morning.  Resistance in March USD is 10178, 10220, and 10285.  Support comes in at 100985, 10047, and 10065.

Dollar Index Daily

March Euro: Significant down-trend channel resistance is seen up at 1.0632 and that level might be a critical pivot point for the Euro.  Overnight scheduled data flow from the Euro zone was a little disappointing and the trade is bracing for some pressure in the wake of the US payroll window.  Traders might expect a washout to 10470 before a major uptrend is seen.  Resistance is at 10665-10690 with support at 10576 and 10538.

Euro Index Daily

March Yen: In addition to distinct windfalls from unfolding weakness in the USD, we should also suggest that part of the recovery off this weeks lows have been the result of evidence of improving conditions inside Japan.  In fact, the Yen overnight should be supported by hints that BOJ might be poised to revise their inflation outlook higher and that follows some improvement in Japanese data.  As in the Euro, traders should look to a noted washout in the Yen later today and then a recovery following.  Resistance is at 8726 then 8780.  Support is at 8621 and 8548.

Yen Daily

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