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Home » Dollar fails to capitalize on upbeat economic data

Dollar fails to capitalize on upbeat economic data

by Joseph Deen
August 13, 2020 11:26
in Technical analysis
0
Trade of the Day: GBP/JPY

Less than 1 million Americans applied for unemployment benefits last week for the first time in five months 


EURUSD
EURUSD remains on the defensive on Thursday, flirting with the 1.1850 intermediate resistance following a recovery from one-week lows in the 1.1710 area. The dollar was nearly unchanged after a series of fresh economic data out of the United States despite initial claims for unemployment benefits came in at 963,000 last week. The result was lower than expected and was the first reading below 1 million since mid-March. Nevertheless, the greenback remained under broad-based selling pressure as traders continue to express concerns over the lack of progress on the fiscal stimulus package in the US. 
Should the euro climb above the mentioned local resistance, the 1.19 figure will come back into market focus. Furthermore, despite the recent bearish correction, the euro remains well inside a bullish trend and could register fresh two-year highs in the days or weeks to come.  


GBPUSD
The GBPUSD pair edged higher today following two days of marginal losses. The prices briefly exceeded the 1.31 handle but were rejected again, suggesting the cable lacks the bullish momentum despite dollar weakness. Of note, cable remains close to March highs registered last week, so the pair may need to see a deeper correction in order to attract fresh buying pressure and challenge the 1.32 barrier for the first time in five months. The daily RSI is pointing slightly upwards and is about to reenter the overbought territory, suggesting the bullish potential could be limited in the short term. as of writing, cable was changing hands right at the 1.31 level, a daily close above which could pave the way toward 1.3130. 


USDJPY
USDJPY is little changed during the European session, changing hands just below the 107.00 figure. Earlier in the day, the pair registered intraday lows around 106.55 where the dollar attracted some demand and erased daily losses. Despite the local rebound, further upside potential in the USDJPY pair looks limited as the 100-DMA will likely act as the next resistance that could cap the current recovery seen since late last week. On the other hand, the technical picture has improved substantially after the 20-DMA turned into support as this level had been holding the bulls on many occasions before. 
Further dynamics in the pair will depend on the upcoming economic data out of the US including retail sales data due on Friday. Also, traders will continue to follow the overall risk sentiment in the context of the looming US-China trade negotiations. Should risk aversion resume, USDJPY could get back under the selling pressure and even retreat below the 20-DMA that now arrives at 106.10.

 
XAUUSD
Gold prices have settled in a parallel channel on the hourly timeframes during the European hours. The bullion briefly dipped below $1,863 yesterday and has regained the $1,900 handle since then. However, the yellow metal struggles to break above the $1,950 area that acts as the key immediate resistance on the way to all-time highs in the $1,275 zone registered late last week. It looks like XAUUSD could suffer a more aggressive downside correction before the rally resumes. In a wider picture, the metal stays within its bullish trend and could refresh record tops in the medium term as market sentiment remains unstable, with high-yielding assets being vulnerable amid the persisting geopolitical, economic, and political risks.  


USDCAD
USDCAD dipped to a nearly six-month low of 1.3210 earlier in the day and turned flat afterward. The pair remains vulnerable to further losses and could threaten the 1.32 handle in the short term, as the daily RSI is pointing lower but is yet to enter the oversold territory, suggesting the bearish momentum hasn’t been exhausted yet. If so, the next support arrives at 1.3170 where the 200-weekly Moving Average lies. On the upside, the dollar needs to regain the 1.33 level in order to shrug-off the current selling pressure at least partially. Now, downside risks continue to persist in general while the RSI in shorter-term timeframes shows some recovery signs, suggesting a local bounce could be in the cards.   

Tags: EURUSDGBPUSDGoldUSDCADUSDJPY
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Joseph Deen

Joseph Deen

Joseph is a technical analysis expert. A graduate of NYU, Joseph has a master's degree in mathematics. On FWNews, Joseph provides exchange rates reviews and forecasts.

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