US Dollar weakens as risk flows start to drive markets

The US Dollar (USD) has lost its footing after having registered strong gains against its major rivals for two straight trading days. The upbeat macroeconomic data releases from China seem to have eased fears over a global economic slowdown. Hence, the USD is having a difficult time attractions investors as a safe haven.

The US Dollar Index, which tracks the USD performance against a basket of six major currencies, turned south and declined toward 101.50 despite having closed above 102.00 on Monday.

Technical analysis: US Dollar unable to gather further strength vs Euro

Following the two-day slide that saw the pair come within a touching distance of 1.0900, EUR/USD has regained its traction early Tuesday. The Relative Strength Index (RSI) indicator on the daily chart has returned to the 60 area, reflecting the lack of seller interest. Furthermore, the pair continues to trade within the ascending regression channel coming from late September.

EUR/USD faces immediate resistance at 1.1000 (psychological level, static level). Once the pair reaffirms that level as support, it could target 1.1100 (psychological level, static level), 1.1160 (static level from April 2022) and 1.1200 (psychological level).

On the downside, 1.0900 (20-day Simple Moving Average (SMA) stays intact as support ahead of 1.0800 (psychological level), 1.0760 (50-day SMA) and 1.0720 (100-day SMA).

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