The U.S. dollar held steady against major currencies on Monday, after posting its biggest weekly gain in more than a month, as traders closed short positions ahead of a Federal Reserve policy meeting this week.
The greenback was trading little changed at $1.21075 against the euro in Asia, after touching an almost one-month top of $1.2093 in the previous session, amid caution ahead of the Fed meeting that runs two days to Wednesday.
The yen was at 109.715, after weakening to 109.840 on Friday for the first time since June 4.
The dollar index, which measures the U.S. currency against six rivals, was mostly flat at 90.510 from as high as 90.612 on Friday. It finished last week with a 0.4% advance.
In recent weeks, the index has fluctuated as traders weighed if inflationary pressure as the economy reopens after the pandemic could force the Federal Open Market Committee (FOMC) into an earlier tapering of stimulus.
Repeated comments by policy makers that inflation would be transitory calmed those jitters, but markets also now anticipate the Fed may be close to giving clues on the timing for slimming its asset-purchase program.
Among other currencies, New Zealand’s dollar held onto declines from last week to trade at $0.71315, after matching the lowest since mid-April at $0.71160 on Friday.
In cryptocurrencies, bitcoin traded around $39,000 after recovering from close to $31,000 last week.
Rival ether was at around $2,500, the middle of a narrowing trading range spanning the past month.
· FOREX OUTLOOK:
Dollar Index has risen well and may test 91.0-91.50 on the upside if it sustains a rise above 90.60. That could be bearish for most currencies globally. EURJPY, Euro, Aussie and Pound look weak and can fall in the near term towards 132.48, 1.2050/25, 0.7650 and 1.4070 respectively. Dollar-Yen has risen along with Dollar Index and can test 110 soon. USDCNY has risen too and may head towards 6.40/41. USDINR has scope for a rise to 73.50 on a break above 73.30 if seen today.
Dollar Index (90.54) has risen well and a break above 90.60, if seen may take it higher towards 91-91.50 on the upside which could be bearish for most currencies globally. A fall from 90.60 is needed for the index to again fall back to 90 in the near term.
Aussie (0.7703) has fallen well and could test 0.7650 which if holds could produce a bounce back towards 0.78 in the near term. Failure to bounce from 0.7650 could make Aussie vulnerable to a sharp fall breaking below the current sideways range of 0.7650-0.78.
Pound (1.4114) is stuck within the range of 1.4070-1.42 and unless a break on either side is seen it would be difficult to give more clarity on further direction. If the dollar index rises from current levels in the near term, Pound could fall towards 1.40.
USDCNY (6.3967) has risen a bit and could follow a range of 6.38-6.41 for the near term.
Euro (1.2103) has fallen well and has scope for a further fall towards 1.2050-1.2025 or even lower in the near term. Watch price action near 1.21 just now.
Dollar-Yen (109.75) is finally inching up towards our expected 110. Immediate view is bullish. A fall from 110 could be seen in the medium term. Immediate support is seen enar 109.30.
Reference: CNBC, ActionForex
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