USDJPY could challenge the 104.20 if risk sentiment remains negative, fueling demand for the safe-haven yen
The euro has nearly reversed earlier intraday losses as the 1.1740 area acted as support, lifting the pair back to the 1.18 area. Still, the common currency has lost some of its bullishness since its rejection from the 1.19 barrier earlier this week. Now, EURUSD needs to confirm a recovery above 1.18 on a daily closing basis in order to retarget this hurdle that stands on the way to 1.20. On the four-hour timeframes, the 200-, 20-, and 100-SMAs act as resistance in the 1.1830-1.1850 area. Once above this region, the short-term technical picture will improve. However, it looks like traders are not ready to take the common currency above 1.18 just yet. It is possible that the pair will see deeper losses before buyers reemerge and take the prices to recent long-term highs.
Cable shed over 100 pips following the outcome of the Bank of England policy meeting, as the central bank pointed to persisting risks for economic recovery. The pair plunged from the 1.2980 area and dipped to 1.2865 in recent trading. As of writing, the cable was changing hands below the 1.29 figure that continues to act as resistance. In a wider picture, the prices remain stuck between the 20- and 200-DMAs. As long as the pound stays between these moving averages, its dynamics is considered neutral. Once above the 20-DMA around 1.31, GBPUSD could resume the ascent toward 1.35.
USDJPY remains on the defensive since Monday when the pair was rejected from the 20-daily moving average. On Thursday, the dollar extended losses to the 104.50 area for the first time since late-July, and it looks like the prices could challenge the 104.20 if risk sentiment remains negative, fueling demand for the safe-haven yen. On the upside, the immediate resistance now arrives around 105.00. On the weekly timeframes, the pair continues to follow the descending 20-SMA that has been capping upside attempts since early-June. The weekly RSI is pointing south but is still in neutral territory, suggesting USDJPY could suffer further losses in the short- to medium-term.
EURGBP continues its volatile trading, having resumed the ascent after three days of steep losses. The reason behind a local reversal is a broad-based weakness in sterling following the Bank of England decision. The pair dropped below 0.91 initially but managed to bounce strongly and regained the 0.91 handle. The euro extended intraday gains to 0.9170 and retreated slightly in recent trading. Still, the cross is yet to regain the 0.92 handle to erase yesterday’s steep losses. Despite the bounce, short-term downside risks persist, and the pair could see a deeper downside correction before the ascent resumes. In this scenario, the common currency may challenge the 20-DMA that arrives at 0.9030.
The cross has been losing ground for the fourth day in a row on Thursday. The euro dipped to late-July lows around 123.30 in recent trading. As the daily RSI continues to grind lower, it looks like the pair will extend the decline in the short term, as the indicator hasn’t entered the oversold territory just yet. Also on the negative side, the cross has been trading below the 20-DMA since the start of the week, and as long as the prices stay under this moving average, downside risks continue to persist. If the common currency fails to hold above 123.30, the 123.00 handle will come back into market focus. However, recovery from this level could be expected as the pair derived support here in late-July and rose gradually to 127.00 at the start of September.