The US dollar found footstep and rose against the basket of major currencies on Tuesday, following Monday’s strong fall of the US currency, on market’s ‘yes’ reaction to Italy’s referendum ‘no’vote.

The reaction was unexpected and sent the greenback to fresh three-week lows.

The dollar index is stabilizing above cracked psychological support, being up 0.36% until now, after falling 1.9% on Monday.

On the other side, the Euro eased from fresh high at 1.0795 and is down 0.5% from session high, but holding above strong 1.07 support zone and maintaining fresh bullish bias, gained on Monday’s strong rally.

Pullback of profit-taking action did not significantly affect near-term bulls and the single currency remains supported on expectations that Italy would not hold early elections after Italian Prime

Minister Renzi’s referendum defeat on Sunday and subsequent confirmation that he would resign, as he promised.

However, the outlook for Euro remains clouded on fears over the health of Italy’s banking sector that could possibly require a bailout from the European Central Bank, weighed down by bad loans.

Investors also remained cautious ahead of the ECB’s policy meeting on Thursday.

The ECB is seen as likely to announce an extension of its quantitative easing program, but any indication that it could begin tapering asset purchases could offset the effect of extending its stimulus program.

Sterling remained steady on Tuesday, holding above strong technical level at 1.2720, former resistance, now reverted to support and hit fresh three-week high at 1.2772. The British pound was additionally supported by the comment of British Chancellor Philip Hammond, who said the government would not rule out the possibility of continuing to make payments into the European

Union budget after Brexit in order to retain access to the single market. The pound was up 0.45% at the time of writing and extending into sixth straight bullish day.

The dollar-yen was steady on Tuesday and up 0.6% after start of American session, attempting above 114.00 handle, on extension of recovery from correction low at 112.85, but still well below fresh 9 ½ month high at 114.81that was posted last week and attacked again on Monday.

The pair maintains strong bullish stance, but may spend some more time in consolidation between two key levels at 112.85 and 114.81.

The Australian dollar was lower on Tuesday, down 0.7%, after Monday’s repeated failure at 0.7500 resistance zone and after the Reserve Bank of Australia kept interest rates on hold, but indicated that the economy could experience a small contraction in the third quarter.

Aussie dollar so far found footstep against its US counterpart at technical support at 0.7429, which guards strong support at 0.7400.

The U.S. October trade gap widened 17.8% to $42.6 billion, from September’s downward-revised deficit of $36.2 billion. Today’s figures showed the largest percentage increase since March 2015 and were driven by drop of exports of soybeans and other goods, signaling that trade would be a drag on growth in the fourth quarter.

European stocks were mixed on Tuesday. Dax was directionless, consolidating under fresh high at 10737, posted after strong rally on Monday.

French CAC-40 index was up 1% from today’s low, but still unable to break above Monday’s low at 4605.

Britain’s FTSE100 Index trade within 50-pips consolidation range on Tuesday and without clear direction.

Wall Street opened unchanged from Monday’s closing, despite expectations for stronger start of Tuesday’s trading. All three major indexes held within narrow range, under Monday rally’s highs in early trading on Tuesday., Market Analysis