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Home » Pound corrects higher due to dollar weakness

Pound corrects higher due to dollar weakness

by Joseph Deen
September 14, 2020 09:57
in Technical analysis
0
A slow start to the week in FX markets

Considering the ongoing Brexit woes, a more robust ascent could attract GBP bears 


EURUSD
As the greenback weakened nearly across the board to start the week, the euro managed to extend recent gains. The dollar remains on the defensive ahead of the opening bell on Wall Street, pushing EURUSD to session highs. Still, the prices refrain from challenging the 1.19 handle as the common currency lacks the upside impetus. The euro could receive a boost later today if the US stocks stage a rebound after the recent sell-off amid a sharp decline in tech stocks. If so, the pair will need to confirm the breakout on a daily closing basis. Otherwise, EURUSD could trim intraday gains and get back below 1.1850. The daily RSI is pointing just slightly higher, suggesting the pair may need the additional catalyst to regain 1.19 in the short term. 


GBPUSD
The pound saw a local reversal around late-July lows and climbed to the 1.29 handle in recent trading. Despite the recent sell-off amid rising uncertainty surrounding Brexit developments, the daily RSI refrained from entering the oversold territory and bounced slightly on Monday, which implies that the renewed downside pressure could be in store after a short-lived bounce. On the four-hour timeframes, the technical picture is improving gradually but the prices are yet to confirm a recovery above the 200-SMA. As of writing, the cable was changing hands just below the 1.29 level that will determine short-term dynamics in the pair. Once this figure turns back into support, the bulls will retarget 1.30. However, considering the ongoing Brexit woes, a more robust ascent could attract sellers. 


USDJPY 
USDJPY is edging lower on Monday, with the short-term technical picture deteriorating on the hourly charts as the pair dipped below the 106.00 handle in recent trading. The dollar failed to stay above the 20-DMA again, while the daily RSI which was nearly flat since the start of September turned lower after the recent decline in the pair. If the downside pressure persists in the near term, the dollar could threaten this month’s lows around 105.60. in this scenario, the greenback could target the 105.00 support for the first time since August 19. On the four-hour timeframes, the RSI is pointing south but hasn’t entered the oversold territory just yet, suggesting there is further room to run to the downside at least in the immediate term. 


XAUUSD
Gold prices saw only marginal gains last week and started Monday on a positive footing due to a weaker dollar. The precious metal climbed to the $1,958 region and regained the neutral 20-daily moving average that could turn back into support if the bullion manages to retain its bullish tone. Further upside potential could be limited if Wall Street indexes open on a firm footing later today. If so, the yellow metal could get back below the $1,950 region. Of note, the daily RSI is pointing only slightly higher, suggesting further gains will likely be limited in the short term. In a wider picture, if risk aversion reemerges, the bullion could challenge last week’s highs around $1,966 and retarget the $2,000 handle. 


USDCHF 
USDCHF has been suffering losses for the fourth day in a row on Monday. On the upside, the dollar is capped by the 20-DMA that arrives just below 0.91. This level is now the key hurdle for bulls, with the selling pressure persisting since rejection from the 0.92 barrier where last week’s lows arrive. Now, as the prices are nearing the 0.9050 intermediate support, market focus is shifting back to the 0.90 figure that could be challenged for the first time since September 1, when the pair plunged to early-205 lows. On the four-hour timeframes, the dollar has been trading below the key moving averages since last Thursday, confirming the downbeat short-term technical picture.  

Tags: EURUSDGBPUSDGoldUSDCHFUSDJPYXAUUSD
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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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