The dollar ended week in red after uninterrupted three-week rally, when it hit fresh 14-year high against the basket of majors. The dollar index was down 0.49% on fresh bearish acceleration in early Monday, adding to Friday’s losses when the index fell 0.35%.

The dollar was dragged by US Treasury yields that eased from recent peaks and on profit taking action after strong rally, inspired by traders’ optimism on Trump’s presidency that is expected to increase fiscal spending and inflation and push US interest rates from multi-year lows. In addition, the greenback was pressured by strong fall of oil prices that fell over 4% on Friday and extended losses by another 0.5% on Monday, pressed by doubts over whether the OPEC would reach a deal about production cut on a meeting due later this week. Prospects of reduced upward pressure on inflation from oil prices, prompted investors to temper expectations for rises in U.S. interest rates bring down treasury yields and the dollar.

The dollar is taking a breather ahead of hedge funds’ earnings releases, due later this week.
The greenback was down 1.2% against yen on Monday’s Asian session, extending pullback from fresh eight-month high at 113.88, posted on Friday, to the session low at 111.34.

The Euro regained traction and extended bounce from last Friday, gaining 0.45% in Asia, after post-US election strong fall found footstep at strong support at 1.0519, low of 03 Dec 2015.

Sterling was higher against the dollar on Monday, up 0.48% for the session and attacked strong resistance at 1.2500 zone. British pound resisted recent strong rally of the dollar and managed to stop losses at 1.2300 support, compared to other major currencies that suffered strong losses during post-us elections period.

Spot gold rallied strongly on Monday, gaining 0.84% in Asia, after recent steep fall was contained by strong supports at $1170 zone, after hitting the lowest levels since February. The yellow metal is correcting recent losses, with focus on December’s FOMC policy meeting that is expected to give strong direction signal for Gold price direction.

Asian stocks were higher on Monday, as lower dollar gave relief to Asian shares, which had underperformed on worries about capital flight to higher-yielding U.S markets in the weeks since Donald Trump’s Nov.8 election win.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%, led by gains in Hong Kong (up 0.8%) and Taiwan (up 0.5%).

Japan’s Nikkei 225, which had performed even better than Wall Street thanks to the yen’s fall, ended down 0.6% on fresh strength of Japanese yen.
On the other side, European stocks were deeply in red on Monday, in risk-off trade, as the sentiment was dampened by fall in oil prices that weighed on energy sector and on rising concerns over an upcoming referendum in Italy.

FTSE 100 was down 0.76%; DAX fell 0.7% and French CAC40 index was down over 1% in early Monday’s trading.

Highlights of the day

Monday’s calendar is light, with focus ECB President Mario Draghi’s speech, due at 14:00 GMT

Important levels
EURUSD
The Euro rallies for the second day and probes above strong technical resistances at 1.0660 zone. Bullish near-term technical studies suggest further upside action, as recovery rally on oversold daily conditions, is gaining momentum. EURUSD is eyeing psychological barrier at 1.0700, above which would open targets at 1.0745/58, with upper breakpoint at 1.0815.
Immediate support lies at 1.0640, followed by 1.0620 and 1.0600.

USDJPY
The pair extended pullback from fresh high at 113.88 to 111.34 so far, approaching first strong support at 111.20. Correction on fresh risk aversion may extend towards next support layers at 110.85 and 110.25, with break below the latter, expected to generate stronger bearish signal. Initial resistance lies at 112.17, followed by 112.55 and 112.90.
US CRUDE OIL
Oil price is consolidating above fresh low at $45.13, posted on extension of Friday’s sharp fall from $48.02 to $$45.87. Oil price is driven by strong negative sentiment and today’s fresh bearish extension cracked important technical support at $45.32, en-route towards next important level at $44.90.
Immediate resistance lies at $45.78, followed by $46.28 and $46.65., Market Analysis