The cable climbed to fresh 2020 highs, buoyed by a weaker dollar
The dollar recovered modestly after fresh economic data out of the US but the general bearish picture hasn’t changed anyway, as the greenback remains under pressure from a dovish revision to the Fed’s monetary policy strategy. The PCE price index in July rose 0.3% on a monthly basis. On a yearly basis, the index came in at 1%, lower than 1.2% expected. The core PCE price index, the Federal Reserve’s preferred gauge of inflation, increased from 1.1% to 1.3% in July versus 1.2% expected.
As such, EURUSD retreated from intraday highs above 1.19 and has settled below this level following the releases. Still, the pair is strongly bullish in the intraday charts, suggesting the euro could make another bullish attempt after a local retreat. However, there may be needed a deeper correction to attract more bulls into the game. The daily RSI is pointing just slightly north and doesn’t suggest any decent upside move in the short term. A daily close above 1.19 is needed for a confirmation of the latest breakout.
GBPUSD resumed the ascent after a pause seen yesterday. On Friday, the cable climbed to fresh 2020 highs, buoyed by a weaker dollar that just to slightly trim its intraday losses after the economic data. The pair exceeded the 1.33 handle for the first time this year and extended the rally to the 1.3320 area. The prices have retreated partially since then but preserved decent intraday gains anyway. The daily RSI is below the overbought territory but the bullish bias is too modest to bet on a daily close above 1.33. On the four-hour timeframes, the pound has been above the 50- and 100-SMAs since Wednesday, pointing to a fairly positive short-term picture.
USDJPY briefly jumped to the 100-DMA for the first time in over a month earlier in the day. This moving average that arrives marginally below the 107.00 handle capped the upside momentum and triggered a sharp sell-off that eventually brought the pair to a nine-day low of 105.20. As of writing, the dollar was changing hands around 105.40, down more than 15 on the day. The technical indicators point to a bearish picture. The daily RSI is pointing south in neutral territory, the dollar is back below the 20-DMA that turned into resistance, and the 100-DMA acts as a strong barrier on the way up.
USDCAD tried to challenge the 1.3050 area but derived support from this area as the dollar trimmed losses slightly after the US data. As a result, the pair has settled in the 1.3080, lacking the upside momentum to regain the 1.31 level. If this figure turns into support by the end of the day, the short-term technical picture will Improve somehow. In a wider picture, the pair remains within a strong bearish trend since March. On the four-hour timeframes, the greenback dropped below the key moving averages in recent trading, which is dollar-negative as well.
Buoyed by widespread dollar weakness, the Kiwi rallied to fresh early-2020 highs around 0.6730 on Friday, posting the strongest weekly gains since late-May. As of writing, NZDUSD was changing hands just a few pips below the mentioned highs, up 1.32% on the day. The immediate upside target now arrives at 0.6820, where the 200-weekly moving average lies. The technical picture looks strongly bullish, but the daily RSI is nearing the overbought territory, suggesting the upside impetus could be exhausted soon. On the downside, the nearest support comes at 0.67. The pair may finish the week below this level should a bearish correction takes place.