The US dollar was poised to close higher against against most of the major currencies for the week before news broke that former National Security Adviser Flynn plead guilty to two charges of lying to the FBI. The clear implication was that he was allowed to plead guilty to a lesser crime than he may have committed in exchange for cooperating with the investigation. The news sent the dollar sharply lower and weighed on equity prices. Both recovered, even if not fully.  

Sterling was the big winner of the week. It rallied to two-month highs on the back of optimism that a deal would be struck shortly to allow the next phase of Brexit negotiations to proceed. The Irish border issue, however, has not been resolved and this sapped the upside momentum ahead of the weekend. Still, it was the third week in four that sterling gained almost 1.0%. .  

Sterling’s technical condition is a bit stretched after rallying a nickel since the middle of November.  It closed above its upper Bollinger Band in the last two sessions before the weekend. The Slow Stochastics are set to turn lower, though the MACDs are still trending higher.  

Initial support is seen near $1.3425-$1.3450 and then $1.3380. A break below $1.3350 would boost the chances a high is in place.Sterling had flirted with the $1.36 area around the middle of September, and even rose to nearly $1.3660, but did not close above $1.3600. That area continues to offer resistance, though the Fibonacci retracement (61.8%) of the drop after last year’s referendum is found near $.1.38. 

The Dollar Index still managed to snap a three-week slide with the most meager of gains. The low for the week (~92.50) was set on Monday, and it briefly traded to below the 61.8% retracement (~92.60) of the run-up from the year’s low recorded on September 8 near 91.00. A break of last week’s low will weaken the technical outlook. On the upside, a move above 93.50 is needed to lift the tone.