Dollar Holds Slim Gains as Stock Market Rally Pauses

The dollar is higher against most of the G-10 currencies at the North American open but with very little direction as forex players show little incentive to place aggressive bets ahead of Thursday’s European Central Bank meeting and a heavy economic calendar Wednesday and Thursday.

The euro was briefly supported by a considerable beat on October German factory orders, rising to the upper end of the overnight range and testing resistance at 1.0800. Factory orders soared 4.9% versus the consensus estimate for a more modest gain of 0.6%. But the gains didn’t stick and before the N. American open, EUR/USD had retreated to 1.0732 leaving the joint currency 0.30% lower against the dollar.

USD/JPY chopped between 114.20 and 113.60, steering clear of Monday’s 113.20 low but not showing any willingness to challenge the 114.60/80 level. With U.S. equities largely treading water, the risk-on trade that would benefit the dollar is thin, but not entirely extinguished. There remains solid support for USD at the 200-hour moving average at 113.20 with near-term support at the 50-hour moving average at 113.80. Last traded at 113.92, the dollar is marginally higher against the yen.