US dollar bounces after initial bearishness on Tuesday

The US dollar has initially pulled back during the trading session on Tuesday, reaching down towards the 106.80 level. We turned around as the Americans took over, showing signs of life and the likelihood of a potential “risk on” move. Market participants will continue to look towards the higher levels if the stock market can show signs of life. I think that the overall attitude of the market is one that is trying to pick itself up, but the reality is that there are a lot of geopolitical headlines out there that could move this market. Remember, the Japanese yen is thought of as a safety currency, and that means that we will go looking towards Japan if some type of concerns with the trade war come about. Beyond that, the Syrian conflict could be an issue, if it starts to flare up.

The 107.50 level above should be important, and if we can break above there I think that we will try the 108 level. Clearing that level could send this market towards the 110 level. The 106.50 level underneath is what I considered to be the short-term “floor” in the market, and if we broke down below there I think that the market will probably drop down to the 105 level, which I believe will support the overall uptrend of this market. A breakdown below that level could send things much lower, but I suspect we should be safe from that type of move in the near term.