The dollar was steadier to start the session but is finding itself on the backfoot as stocks turn positive with European indices seen up around 0.2% to 0.4% while US futures are up 0.3% on the day. That comes after a tepid start to proceedings but I wouldn’t look too much into the risk advance as the Fed will ultimately be the key driver of sentiment this week.

In any case, the dollar is losing some ground but key technical levels are still holding and they are well worth watching in case we do see traders make any sudden moves before the Fed this week.

EUR/USD is up 0.4% to 1.0250 but is still a bit away from contesting the 50.0 Fib retracement level at 1.0283:

Meanwhile, GBP/USD is also up 0.4% on the day to 1.2050 but is facing some short-term resistance around 1.2033-45 with the Friday high at 1.2063 also potentially limiting an upside push for the time being. But if buyers can push through that, the next key level to watch would be a potential push towards 1.2200.

Another big pair to watch is AUD/USD as it is up 0.4% to just above 0.6950 at the moment:

The 50.0 Fib retracement level at 0.6982 is a key level to watch alongside the 0.7000 handle, with large option expiries also seen at the figure level today. That is likely to keep gains in check but a break above will make for an interesting technical situation with the 16 June high at 0.7069 a potential target before the 100-day moving average above 0.7100 currently.

This article was written by Justin Low at www.forexlive.com.