Charts: TradingView

It was a quiet session for the financial markets on Monday with price action range bound as US banks remained closed in observance of Martin Luther King Jr. Day. Given the lacklustre performance, here is a brief reminder of the technical position of the EUR/USD and the US Dollar Index.

US Dollar Index Welcomes Daily Channel Support

The US dollar, as measured by the US Dollar Index, probed lower in early Asia, spiking to a low of 101.77, levels not seen since June of 2022. However, USD bids swiftly found their footing and forged a rebound off a channel support on the daily timeframe, taken from the low 103.45 (just north of a daily Quasimodo formation at 101.65). Consequently, as evident from the daily chart below of the US Dollar Index, buyers and sellers are now squaring off between the aforementioned channel support and neighbouring daily resistance coming in at 102.36 (Quasimodo support-turned resistance).

Therefore, these two levels will be important to monitor going forward. Ultimately, though, the immediate trend (daily) favours sellers, potentially approaching (and perhaps engulfing) Quasimodo support mentioned above at 101.65.

Dollar Index Daily Chart

EUR/USD at Daily Prime Resistance

This leads us to the EUR/USD currency pair which recently shook hands with a daily prime resistance area at $1.0954-1.0864 and touched gloves with a fresh nine-month pinnacle. Note that the prime resistance is also joined by the Relative Strength Index (RSI) delivering early negative divergence ahead of overbought space. Given the inverse correlation between the EUR/USD and the Dollar Index (euro controls a weighting of 57.6% in the index), a push lower in the euro from its prime resistance could see the Dollar Index bid from its daily channel support. EUR/USD shorts, therefore, are likely to zero in on daily support coming in at $1.0602.

Against the backdrop of the daily chart, the H1 timeframe on the EUR/USD saw Monday elbow its way south of trendline support, etched from the low $1.0482, and appears poised to touch $1.08. As noted in previous technical research, should the unit shift under $1.08, short-term breakout sellers are likely to take aim at $1.0764. While a push northbound could target the $1.09 handle on the H1 and, given its close relationship with the daily prime resistance, may be seen as an upside target and a location active sellers might emerge from.

EUR/USD Daily Chart

EUR/USD H1 Chart

Economic Radar Today?

Today is a busy one for economic data, beginning with the year-over-year growth rate (GDP) for China for Q4 at 2:00 am GMT (Expected: 1.8%; Previous: 3.9%), followed by the UK Claimant Count for December at 7:00 am GMT (Expected: 16,000; Previous: 30,500) and Germany’s ZEW Economic Sentiment Survey at 10:00 am GMT (Expected: -15.0; Previous: -23.3). US hours will see the latest Canadian inflation data at 1:30 pm GMT (Expected: 6.3% Previous: 6.8%) and the US New York Manufacturing Index (Expected: -8.7 Previous: -11.2). We will also see earnings from Goldman Sachs and Morgan Stanley during pre-market hours.

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