EURUSD extended its gains overnight by another 100 pips but reversed at the 1.0736 December high.
Meanwhile, the US Dollar Index (DXY) fell below the 104.12 support I mentioned in Saturday’s weekly forecast.
That isn’t surprising, given that the EURUSD and DXY move inversely.
But as always, the daily close will confirm whether the dollar has broken support.
You also have to be careful getting too bearish on the US dollar above 103.50, as that’s the yearly open for the index.
Any higher time frame opening price is significant, and 103.50 being the yearly open makes it a must-watch level.
For now, the euro is holding above former range resistance at 1.0690 on a 4-hour closing basis.
The pair fell below it a few hours ago but recovered on the last 4-hour close.
Bulls are in control as long as EURUSD holds above 1.0690 on a 4-hour closing basis.
However, you have to be careful with Monday breakouts.
Like Fridays, Mondays attract lower than usual volume than what you get between Tuesday and Thursday in the forex market.
So while the EURUSD is holding above key support for now, you should take today’s move with a grain of salt.
That’s especially true while the DXY is above the 103.50 yearly open.
If today’s bullish breakout holds, the next key resistance for EURUSD lies between 1.0763 and 1.0765.
It will take a daily close above 1.0765 to open up 1.0850.
But as mentioned above, a 4-hour close back below 1.0690 would be bearish toward 1.0540.