EURUSD looks ready to turn 1.20 into support for the first time since May 2018
EURUSD rose to fresh more than two-year highs just a few pips below 1.20 on Tuesday as the dollar remains under a heavy downside pressure these days. The bulls refrain from challenging this psychological barrier so far but the fact that the pair clings to the upper end of the range may be a signal of the euro’s readiness to turn this significant level into support for the first time since May 2018. In this scenario, the common currency could extend the ascent to 1.2080. On the other hand, the daily and the weekly RSIs are flirting with the 70 mark, suggesting some profit-taking could take place in the short term amid the overbought conditions.
The cable rallied to fresh 2020 highs, extending the ascent for the third day in a row on Tuesday, capitalizing on broad-based weakness in the US dollar. The pair climbed to the 1.3480 area, now targeting the 1.35 handle last seen in December 2019. Once above this barrier, the pound could target 1.3750 in the longer run. However, considering that the 1.35 level represents a strong resistance area, GBPUSD may need the additional catalyst to challenge this figure and confirm another breakout. Furthermore, the daily RSI has entered the overbought territory, suggesting a local downside correction could take place in the near term as the cable looks attractive for profit-taking at the current levels.
USDJPY climbed back to the flat-line in recent trading, having rebounded from the intraday support of 105.60. Still, downside risks continue to prevail as the dollar still struggles to make a decisive break above the significant 20-DMA that acts as the immediate resistance again. The daily RSI is directionless in the neutral territory, suggesting the greenback will extend its short-term consolidation before it decides on further direction, and the least path of resistance still points to the downside. USDJPY needs to overcome the 100-DMA marginally below the 107.00 handle to shrug off the selling pressure at least partially.
The Kiwi extends its ascent after strong gains witnessed last week. The pair rallied to July 2019 highs around 0.6776 on Tuesday and remained elevated ahead of the opening bell on Wall Street. Of note, the prices reached the 200-weekly SMA that could cap further upside attempts in the short term. Furthermore, the daily RSI is pointing only slightly upwards and is about to enter the overbought territory, suggesting the bullish momentum is nearly exhausted. If so, NZDUSD could correct lower by the end of the day, with the nearest support coming at 0.6740 while a break below 0.67 may trigger more aggressive profit-taking in the days to come. However, the pair can also continue the current rally despite the above-mentioned technical signals if the overall pressure surrounding the greenback persists.
USDCHF bounced from early-2015 lows just below 0.90 earlier on Tuesday and climbed to the 0.9070 area in recent trading, changing hands around the intraday highs. Despite a local recovery, the overall trend in the pair remains bearish, with downside risks persisting as long as the dollar stays below the 50-daily moving average that arrives around 0.9250. The prices managed to stage a local reversal due to mainly positive risk sentiment, while the greenback stays under severe selling pressure nearly across the board. In the short term, USDCHF needs to regain the 0.91 immediate resistance to make a bottom and extend its correction. However, as the daily RSI doesn’t give aby bearish divergence signals, it looks like the pair could resume the decline after a short-term bounce.