US equities rose sharply overnight while dollar is broadly higher as the concerns over Greece averted. DJIA gained 217.27 pts, or 1.22% to close at 17977.68 while S&P 500 rose 22.98 pts, or 1.11% to close at 2099.60. Easing concerns on Greece would likely leave the room for Fed to lift interest rate from near zero level finally in September. The focus will turn to Fed chair Janet Yellen's testimony as well a string of important economic data this week. Yellen would probably reiterate that incoming data broadly support the central bank's latest forecasts, a rate hike would be warranted by the end of the year.
The strong rebound in DJIA and break of 55 days EMA indicates that pull back from 18351.36 has completed at 17465.68 already. The structure of this decline was corrective and was support above 38.2% retracement of 15855.12 to 18351.36 at 17397.79. The development now favors a retest on 18351.36 high in near term. And from a medium term point of view, the up trend is still intact and a new high is anticipated.
The near term outlook in dollar index is less clear as the current rebound is limited below 97.77 resistance so far. Firstly, the sideway pattern from 93.13 might extend for a while. Meanwhile, another dip could be seen as the corrective pattern from 100.39 extends. In any case, though, above 97.77 will bring retest on 100.39. Meanwhile, in case of another fall, strong support is anticipated at 38.2% retracement of 78.90 to 100.39 at 92.18 to contain downside.
Australian dollar was lifted mildly higher today as NAB business confidence rose to 10 in June, hitting a 22-month high. NAB noted that a combination of lower interest rate, lower exchange rate and better budget listed confidence. And, non-mining sectors were seen performing better than expected. However, there was a disconnection between current sentiment and outlook as more businesses were expected to cut investments in the next 12 month.
Looking ahead, inflation data will be the major focus in European session with German CPI, Swiss PPI as well as UK CPI and PPI featured. Eurozone will release industrial production while Germany will release ZEW economic sentiment. US will release retail sales, import price and business inventories later in the day.