Powell’s speech at the Jackson Hole conference could boost demand for the greenback
The euro bounced from local lows around 1.1750 registered last Friday amid a broad-based rally in the greenback. The dollar shifted into a recovery mode late last week due to stronger-than-expected economic data out of the United States but failed to extend gains and came back under the selling pressure on Monday. As a result, EURUSD climbed back above the 1.18 handle, facing the intermediate resistance around 1.1850. A break above this level could open the way for a retest of the 1.19 barrier. On the downside, failure to stage a more decisive bounce may send the prices back below 1.18. Anyway, the overall bullish trend remains intact at this stage, with bulls still targeting the 1.20 psychological level.
GBPUSD finished unchanged last week as the prices were rejected from fresh highs above 1.3250 and retreated below 1.31. On Monday, the pair turned green on the daily timeframes but struggled around the 1.3130 intermediate resistance. The daily RSI has reversed higher in recent trading but the bullish bias is too weak to bet on more robust gains in the short term. Once above the mentioned local barrier, the cable will retarget the 1.32 figure while on the downside, the pair needs to hold above the 1.3060 key support in order to avoid deeper losses. In a wider picture, the bullish potential persists as long as GBPUSD stays above the key moving averages and the 1.27 handle.
USDJPY is flat on the day after another failed attempt to break above the 20-DMA. The pair was rejected from the levels marginally below 106.00 while the intraday support arrives around 105.70. The daily RSI is flat, suggesting the pair could spend some time in a consolidative mode before the dollar decides on the further direction. In the near term, the pair needs to turn the 20-DMA into support so that to retarget the 107.00 barrier. Later in the week, the Federal Reserve Governor Jerome Powell’s speech at the Jackson Hole conference could boost demand for the greenback if he expresses a relatively upbeat tone on the economic recovery and the central bank’s monetary policy.
The Kiwi has accelerated the recovery on Monday after a brief retreat below 0.65 last week. As of writing, the pair was changing hands just above the 50-DMA that now arrives at 0.6555. A daily close above this level could open the way to 0.66 if the dollar comes back under a severe downside pressure across the board. Otherwise, NZDUSD may be rejected from the current levels and threaten the 0.65 support. In the four-hour timeframes, the prices have exceeded the 50-SMA in recent trading. If this level turns into support on a daily closing basis, further gains could be expected in the short term.
USDCAD continues to suffer losses for the third day in a row on Monday. The pair failed to hold above the 1.32 handle last week and resumed the decline within its long-term bearish trend, threatening this year’s lows. A break below 1.3130 will open the way to 1.31 and could trigger a deeper sell-off in the days to come. The daily RSI is pointing slightly lower but is yet to enter the oversold territory, suggesting the downside potential hasn’t been exhausted yet. The technical indicators in the daily charts are also pointing to bearish risks. On the upside, the dollar needs to firmly regain the 1.32 handle first in order to stage a more sustainable recovery.