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Pound corrects higher due to dollar weakness

Dollar lower as risk sentiment remains positive

October 9, 2020 09:48
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Home » Dollar lower as risk sentiment remains positive

Dollar lower as risk sentiment remains positive

by Joseph Deen
October 9, 2020 09:48
in Technical analysis
0
Pound corrects higher due to dollar weakness

The pound continues to tread water within a tight range, extending its three-day consolidation

EURUSD

The euro has bumped into resistance around 1.1810 on Friday and was slightly off intraday highs as of writing. The pair managed to push higher as dollar demand turned weaker amid the prevailing risk-on mood amid the resurgent stimulus hopes. Despite the current upside movement, the common currency lacks bullish impetus to challenge the mentioned resistance that acts as the immediate hurdle for euro bulls at this stage. It looks like the pair will struggle to overcome this barrier in the short term. Furthermore, there is a risk of some profit-taking ahead of the weekend. However, the downside potential looks limited as well.

GBPUSD 

The pound continues to tread water within a tight range, extending its three-day consolidation after a strong rejection from the 1.30 psychological handle earlier this week. At that, the pair retains a modest bullish bias while holding above the three key moving averages that continue to act as support levels. These are bullish signs, suggesting the pound could proceed to a breakout once the current consolidative phase is over. On the four-hour charts, the prices are flirting with the 20-SMA, confirming the directional movement in the pair, with most technical indicators looking neutral including the moving averages. As of writing, the cable was changing hands around 1.2940, after failed upside attempts around the 1.2970 intermediate resistance.  

USDJPY

USDJPY turned slightly negative after two days of gains on Friday. The pair is trading marginally lower this week’s highs registered around 106.10, still struggling to make a decisive break above the 106.00 barrier. On the downside, a break below 105.80 could pave the way for a deeper correction in the short term. However, it looks like the dollar will remain in a consolidative mode in the short term despite a modest bearish bias in the daily RSI. On the hourly charts, the greenback has settled slightly above the ascending 20-SMA while the RSI turned marginally higher in recent trading, which implies that the pair could refrain from a more aggressive retreat on a daily basis. 

XAUUSD 

Gold prices jumped north on Friday, deriving support from a weaker dollar. The precious metal has finally got back above the $1,900 psychological level and extended intraday gains to the $1,918 area, slightly off this week’s highs registered around $1,920 earlier this week. As a result, the daily RSI which has reversed higher three days ago, saw a more decisive bullish slope, suggesting the prices could at least retain the current upside bias. However, it looks like the yellow metal could lack the directional impetus to challenge the above-mentioned local highs as risk-on tone in the global financial markets caps demand for the safe-haven metal.

USDCHF

USDCHF has been under the selling pressure for the third consecutive day. On Friday, the decline has accelerated, pushing the prices to fresh local lows around 0.9120. Now, as the prices are back under the 20-DMA, the technical picture has deteriorated somehow, with the bearish bias in the daily RSI adding to a weaker short-term outlook for the pair. Once below the mentioned lows, the dollar could extend losses to the 1.91 handle, a break below which may trigger a broader sell-off. However, the downside potential looks limited at the moment. On the upside, the immediate resistance arrives at 0.9150.  

Tags: EURUSDGBPUSDUSDCHFUSDJPYXAUUSD
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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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