The dollar index, which measures the greenback against a basket of six key rivals, was barely changed at 95.846 after gaining for three straight sessions.
“The overly pessimistic view on developed economies and the overly dovish view on the (Federal Reserve) is being unwound,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
Trading was likely to remain subdued in Asia with many markets across the region closed for Lunar New Year holidays for much of the week.
The euro was flat at $1.1438, off three-week high of $1.15145 set on Thursday.
Against the Japanese yen, the dollar rose a tad to 109.93 yen. It had risen above 110 yen for the first time since Dec. 31 overnight.
“There’s further room to rise for the U.S. two-year yield. If this move continues, dollar/yen will rise above 110” again, said Mizuho’s Yamamoto.
Sterling was flat at $1.3038 after seesawing during the previous session on uncertainty over the way Britain will leave the European
· EUR/USD Technical Analysis: A test of 1.1500 and above remains on the cards while above 1.1301
EUR/USD keeps correcting lower following last week’s breakout of the 1.1500 handle.
The leg lower, however, appears well supported by the 21-day/10-day SMA in the 1.1423/18 band for the time being.
The constructive outlook and potential re-visit to the 1.1500 area and above remains on the cards as long as the short-term support line underpins, today at 1.1301.
· The AUD/USD pair is feeling the pull of gravity, courtesy of the dismal Aussie data. The seasonally adjusted retail sales fell 0.4 percent in December, missing the estimated 0.1 percent drop.
· API AND ISM DATA, TRUMP STATE OF THE UNION SPEECH IN FOCUS
Looking ahead, API inventory flow data is on tap. The outcome will be evaluated relative to forecasts calling for a modest 878.6k barrel build to be reported in official EIA statistics Wednesday. API deviations to the up- or downside may hurt or help prices, respectively.
The non-manufacturing ISM survey is also due. The pace of service-sector growth is expected to have slowed in January. Broadly speaking, timely US news-flow has tended to outperform relative to forecasts since the beginning of the year. A similar result here may buoy yields and USD, hurting gold.
President Donald Trump’s State of the Union address is a wild card. If he uses the occasion to tease the likelihood of a trade deal with China and downplays the probability of another government shutdown over immigration policy, the markets' mood may brighten. The reverse is likely if he steers the other way.
· U.S. oil prices inched up on Tuesday, buoyed by expectations of tightening global supply due to U.S. sanctions on Venezuela and production cuts led by OPEC.
U.S. West Texas Intermediate (WTI) crude futures were at $54.77 per barrel at 0223 GMT, up 21 cents or 0.4 percent. They closed down 1.3 percent on Monday, after earlier touching their highest since Nov. 21 at$55.75 a barrel.
International Brent crude oil futures were at $62.72 a barrel, also up 21 cents or 0.4 percent, after closing down 0.4 percent in the previous session.
Analysts said that U.S. sanctions on Venezuela had focused market attention on tighter global supplies.
"Fresh U.S. sanctions on the country could see 0.5-1 percent of global supply curtailed," said Vivek Dhar, mining and energy analyst, Commonwealth Bank of Australia.
· CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices paused to digest gains after breaching resistance in the 54.51-81 area. Buyers see the next noteworthy barrier in the 57.96-59.05 zone, with a close above that eyeing the underside of former trend support line at 61.21. Alternatively, a reversal back below 54.51 sets the stage for another challenge of the 49.41-50.15 region.
Reference: Reuters, CNBC, Daily FX
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