The USD looked like it might have really fallen away this time yesterday as risk-on was certainly the order of the day in Asian trade.

However, as the day progressed the lustre of the early stages of a deal between the US and China began to fade, as the pundits started picking holes in the story.

As a result, markets were generally weak into the close, with the early gains getting absorbed. Similarly, the risk on currencies, particularly the AUD/USD and NZD/USD struggled to hold their highs and gave up some of the move.

Oil was the leader and oil stocks rightfully rallied hard. We are seeing more follow through in the oil price today, but it appears markets are of the mind that it is time to take some profits.

The USD Outlook

The DXY remains right around the resistance level at 97.00, with little by way of developments. Even a strong ISM couldn’t see much of jump and as mentioned the risk-on play didn’t hurt the dollar too badly.

For now, 97.00 is resistance with R2 at 97.70-80 while S1 remains at 96.00-20.

We have a heavy data week ahead and it appears that Friday will once again dictate the week with US employment.