The dollar was holding steady near its intra-day highs against the majors, buoyed by higher equity prices and higher Treasury yields. Tuesday’s decision by the Bank of Japan to leave interest rates unchanged while also talking up the economy and dismissing any detrimental impact on the economy from the falling yen resulted in a higher USD/JPY. The dollar inched up to 118.25 overnight and made several unsuccessful attempts to breach this level during early North American trading. The dollar drifted lower, but has been able to stay close to 118.00 with support at the 50- and 100-hour moving averages at 117.51 keeping selling pressure at bay.
EUR/USD returned to 1.0366 support after the U.S. open and bounced higher, landing just below 1.0400, erasing most of the dollar’s gains against EUR. One interesting development is the movement between 1.0366 and 1.0400 which roughly corresponds to the oversold/overbought levels in the RSI chart. This could keep the EUR/USD pair confined between these two levels for the remainder of the week as trading thins out before the Christmas holiday.