EUR/USD: Bounce extends higher as dollar environment stays volatile
The dollar has been volatile in trading so far today as the market switches from being more pessimistic to being optimistic and then back to pessimistic and then to being more optimistic once again.
It all started with US futures trading down by 2% before recovering paring losses after Congress reached a bipartisan agreement for more than $2 trillion stimulus package. But in the European morning, risk fell off and that saw futures erase gains of over 2% to fall by 1% lower.
As the cash market opens, US stocks were more mixed but then pushed higher on the day with the S&P 500 now seeing over 4% gains.
In turn, the dollar switched from being softer to stronger and is now softer again on the day.
As such, EUR/USD moved from a high of 1.0850 to 1.0800 before bouncing back towards 1.0860 currently. Notably, price is looking to keep above the 1.0800 level as well as the 23.6 retracement level at 1.0839 and that will be a good platform for buyers to build on.
But looking at the near-term chart:
Buyers still need to do more as they have to try and break back above the 200-hour moving average at 1.0895 and minor resistance around 1.0885 to establish a more bullish near-term bias in the pair.
As such, despite the dollar flip flop and the risk mood improving, one must not quite rule out the dollar just yet - especially with the US weekly initial jobless claims release tomorrow set to be a real showstopper.