USDJPY accelerated the decline after failed attempts to hold above the descending 20-DMA earlier this week
EURUSD rallied above 1.2200 for the first time since April 2018 on Wednesday, driven by a combination of unexpectedly strong economic data out of Europe and broad-based weakness in the safe-haven dollar that came under intense selling pressure due to further progress towards a deal on the US stimulus package. As such, the common currency peaked above 1.2210 and was clinging to the 1.2200 handle at the time of wiring. Following the latest rally, the daily RSI has reentered the overbought territory for the first time in two weeks. Signaling a potential local downside correction. On the four-hour timeframes, the pair has been deriving support from the ascending 20-SMA for nearly a week already, so a break below this moving average could trigger a more pronounced retreat in the short term.
The cable climbed to the 1.3520 area in recent trading, staying just shy of long-term highs registered around 1.3540 two weeks ago. Now, as the pair is back above the 1.3500 figure, it needs to confirm the latest breakout on a daily closing basis. On the hourly charts, GBPUSD stays firmly above the ascending 20-SMA which represents the key immediate support and arrives at 1.3450 today. On the positive side, the daily RSI has not entered the overbought territory yet while pointing north, suggesting there is more room on the upside. In this scenario, the pound could challenge the mentioned highs and derail the 1.3550 area if the greenback stays under pressure across the board.
USDJPY accelerated the decline after failed attempts to hold above the descending 20-DMA earlier this week. On Wednesday, the pair slipped to 103.30 for the first time in over a month, and it looks like the prices could extend losses to the 103.15 region, a break below which would pave the way towards March lows. Both short- and medium-term technical outlook for USDJPY remains downbeat at this stage. However, the pair may stage a strong bounce if the Japanese yen demand reemerges any time soon. At the same time, the daily RSI is yet to enter the overbought conditions, which implies that the greenback could suffer further losses before a local reversal takes place.
USDCHF extended its gradual decline to fresh early-2015 lows on Wednesday, nearing the 0.8800 figure. The daily RSI has dipped below the 30 figure nut continues to point south, suggesting the dollar will likely keep bleeding in the short term and could challenge fresh lows. In case of a bounce, however, the pair may stage a vivid recovery as the USD looks attractive for buyers at the current levels from the technical point of view. In case of a rebound, the descending 20-DMA (today at 0.8973) will be in the market focus as a climb above this moving average would be a sign of the easing selling pressure.
The Aussie continues to tread water around mid-2018 highs just below the 0.7580 area. As the pair refrained from a deeper bearish correction earlier this week, it looks like the Australian currency is ready to challenge the 0.7600 figure during the next bull run amid dollar weakness. Of note, the daily RSI has now settled in the overbought territory, suggesting the pair could struggle on the way to fresh long-term tops in the short term. If a bearish correction takes place, AUDUSD will first target the 0.7550 support area, followed by 0.7530 and 0.7500. On the four-hour timeframes, the pair derives support from the 20-SMA, now at 0.7544.