The quotes of the US dollar index returned to the technical support level of 90.50, however, the activity of sellers remains very weak. The bearish scenario, which takes into account the decline to 90.00 and further to 89.60, remains in priority until the return and fixation of USDX quotes above 90.50.
Traditionally, on the first trading day of the week, the saturation of the news background is low, so all the attention of traders and investors will be focused on the emerging information about the Fed's readiness to raise interest rates in the near future. The appearance of such information will contribute to the strengthening of the USD.
By the opening of the European trading session, buyer activity remained weak, however, the bullish scenario is still a priority. The nearest strong technical resistance level is 1.2175, a break of which will open the way to 1.2240 and further to 1.2270. Please note that the pair is held in the ascending channel, thereby indicating the advantage of buyers. Therefore, a breakout and fixation of the pair's quotes under the technical support level of 1.2100 will indicate the weakness of buyers, while a breakout of the 1.2055–1.2075 zone will not only cancel the bullish scenario, but also activate the bearish one.
The moderate weakness of the USD and the lack of confidence in the Fed's readiness to raise the rate puts pressure on the US currency, thereby contributing to the strengthening of the pair. Until the pair's quotes return to 1.4075, the bullish scenario remains in priority.
Today, Britain will not publish important macroeconomic reports that can have a strong impact on the GBP, so only during the US trading session we can see an increase in trading volatility.
Pay attention to the upcoming speech of the voting members of the FOMC. Any hints of their willingness or the need for the Fed to raise rates may provide additional support to the pair. Also today, during the US trading session, representatives of the Bank of England will make a speech. All this increases the probability of an increase in the volatility of trading in this currency pair.
Demand under the technical support level of 109.25 remains elevated, keeping sellers from developing a more powerful wave of decline. But at the same time, we are seeing a really high activity of sellers. Therefore, even a slight weakening of the US dollar will lead to the development of a more powerful wave of decline. The bearish scenario takes into account the weakening of the pair's quotes to 108.40 and, as a result, the formation of a sideways trend.
The above overview is not a direct guide to action, but only a recommendation.