The dollar hit a two-week high against a basket of currencies, reflecting a typical pattern of gains in January following losses in December, ING said.
“The dollar strength in the early part of the year is often associated with the December tax flows by U.S. corporates being reverted,” it said.
The dollar also gained as markets questioned recent bets on sharp U.S. interest-rate cuts in 2024.
Wednesday’s job openings for November and December ISM manufacturing data are expected to be good and should prop up the dollar, ING said.
EUR/USD’s pullback from its late-December high of 1.1139 may extend further, based on technical charts, UOB’s Global Economics & Markets Research said.
Despite EUR/USD reaching 1.1139, there’s no clear increase in upward momentum and the pullback from 1.1139 was accompanied by bearish divergence on daily moving average convergence divergence indicator, it said.
Downward momentum is also starting to build, which suggests 1.1139 may be a peak for the next 1-2 months. The rising trendline that connects lows of November and December and the 55-day exponential moving average, both around 1.0860, should offer strong support, UOB added.