Dollar reverses its moves from overnight trading, what’s next?

The dollar retreats to start European trading

The aussie and kiwi looks set to secure breakouts against the dollar as we get into trading today but against the euro and pound, the dollar is still reversing its moves from overnight trading for the most part.
EUR/USD is looking poised to head towards another retest of 1.1900 while GBP/USD is once again starting to take aim at the 1.3400 handle.
Despite the more positive risk backdrop, the move here looks to be more of a pullback after the short squeeze in overnight trading that came after US PMI data.
I would argue there’s some elements of profit-taking and month-end rebalancing flows somewhere in that picture, and we’re seeing that normalise currently.
That said, the breakouts in AUD/USD and NZD/USD respectively does warrant some attention with the former potentially looking towards the year’s high @ 0.7414 while there is little stopping the latter from a move towards its June 2018 highs @ 0.7050-60.
So, what’s next for the greenback?
In my view, the euro and pound levels above are key points to be aware of as that will help to solidify any notion of a further dollar breakdown in the short-term.
The dollar index (not my favourite) is also pointing towards a retest of a decent support level and that might warrant further caution as well if that breaks:

Another point to note is that while the dollar is sagging to start the session, gold is still down by 0.6% and can’t keep its head above water. I reckon that says a lot about gold sentiment at the moment with a retest of $1,800 looking more likely as such.

Source: Technical analysis

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