There has obviously been a boat load of US dollars bought over the last four sessions. There are some preliminary technical signs that the near-term momentum may have exhausted itself and short-term participants are better advised sell into a bounce rather than rush into it now.
Heavy selling failed to send the euro though the $1.3050 level and a bounce now could carry it up into the $1.3150-60 area. Sterling failed to make a new low in the North American morning and a bounce could see $1.5460-80.
The Australian dollar is perhaps the most interesting. It is recording an outside day, having traded on both sides of Friday's range. The new lows recorded earlier today corresponds to a 38.2% retracement of up trend off the 2008 lows. To solidify the expectation for a near-term bounce, it would be best, from a technical perspective for the Aussie to close the North American session today above Friday's high of roughly $0.9260. A short-term recovery can see $0.9350-$0.9400.
The yen does not fit as nicely into this picture. Today's dollar high near JPY98.70 could be important technically as it is a 50% retracement of the dollar's decline from May 22's multi-year high. Initial support now seen near JPY96.80.
To be clear, this is not a strategic call, but a tactical warning. Over anything but the shortest of terms, the dollar, we think is still headed higher.