The main range is 95.551 to 100.643. Yesterday’s low was 97.632. It fell inside the retracement zone. If 97.496 is taken out then the chart pattern has failed and prices could plunge.
The first upside target is the 200-day moving average at 98.522 and the 50-day moving average at 98.708. The new short-term range is 100.643 to 97.632, making its retracement zone at 99.138 to 99.493 a valid target. Traders should also watch the reaction at the 99.183 swing top.
On Monday we should find out if the reversal on the close was short-covering or real buying.
Yields Drop, But Fed Pricing Fails to Support Follow-Through Selling
The early move made sense. Lower oil prices knocked inflation expectations down and Treasury yields followed. The 10-Year U.S. Treasury yield fell from 4.315% to 4.226% before bouncing back to 4.248%. When yields dropped the dollar dropped with them. That’s the standard playbook and traders ran it hard.
What stopped it was the Fed. Markets were pricing about a 26% chance of a December rate cut going into Friday. That number didn’t move enough to justify keep selling the dollar aggressively. Without a clear shift toward easier policy the selling ran out of conviction.
The Currencies Told the Real Story
I think what happened late in the session was real repositioning, not just short-covering ahead of the weekend. The tell was in the currencies. The euro had reached its highest level since February and the yen gained on narrowing rate differentials. Both reversed by the close. Sterling was already under pressure after mixed Bank of England signals. When the dollar strengthened and every major currency weakened at the same time, that’s not a technical bounce. That’s flows moving back into the dollar.
