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Home » Dollar resumes the downside after a short-lived bounce

Dollar resumes the downside after a short-lived bounce

by Joseph Deen
January 21, 2021 07:03
in Technical analysis
0
Pound corrects higher due to dollar weakness

Following failed recovery attempts, the greenback is under pressure across the board 

EURUSD

EURUSD recouped yesterday’s losses, having exceeded the 1.2100 figure once again on Thursday. Still, the upside potential looks limited for the time being, with the 1.2150 area representing the immediate resistance. On the weekly timeframes, the common currency looks bullish following two weeks of losses while staying above the key 20-SMA, suggesting the strong uptrend remains intact despite the recent correction from long-term highs. Still, EURUSD needs to overcome the 20-DMA that arrives marginally below the 1.2200 barrier in order to regain a more solid bullish bias. Otherwise, another downside correction could take place in the days to come.

GBPUSD

GBPUSD rose to fresh May 2018 highs around 1.3745 on Thursday amid positive risk sentiment that sent the safe-haven dollar lower across the board. As of writing, the pair was clinging to the upper end of the extended trading range, suggesting the rally could continue in the short term, especially as the daily RSI hasn’t entered the overbought territory just yet. Furthermore, the cable has settled above the ascending 20-DMA that has been capping losses for over a month already. A daily close above the 1.3700 figure would be a confirmation of the latest breakout. If a downside correction takes place any time soon, the immediate support should be expected at 1.3715.

USDJPY

USDJPY failed to preserve gains above the 20-DMA that now acts as the immediate resistance. The pair encountered resistance around 104.00 on Wednesday and has been trending lower since then. As of writing, the dollar was changing hands in the 103.40 area, slightly off two-week lows registered earlier in the day. Now when the pair is back below the mentioned moving average, the least path of resistance is to the downside at least in the short term. On the hourly timeframes, USDJPY continues to follow the descending 20-SMA that caps recovery attempts, adding to a bearish technical picture at this stage.

XAUUSD

XAUUSD surged to two-week highs around $1,875 earlier in the day before erasing modest intraday gains. It looks like the bullish momentum is waning following yesterday’s rally. The yellow metal has encountered resistance represented by the important 20-DMA, and it looks like the bullion will need an extra bullish catalyst to overcome this barrier. In a wider picture, the pair needs to get back above the $1,900 handle in order to stage more robust gains in the medium term. On the downside, the immediate support is expected at $1,855. As long as the yellow metal stays above this figure, downside risks look limited. On the four-hour charts, the prices are stuck between the 100- and 200-SMAs, suggesting the bullion could spend some time in a consolidation mode before deciding on a further direction.

USDCHF

USDCHF encountered local resistance around 0.8920 on Wednesday and has been retreating since then. Earlier in the day, the pair dipped to the 20-DMA that once again triggered a bounce. Still, the dollar stayed negative on the day, struggling to regain the 0.8900 figure. The daily RSI is nearly directionless in the neutral territory, suggesting the pair could hold above the mentioned moving average (today at 0.8860) in the short term. On the four-hour charts, a bearish bias prevails, with the greenback flirting with the 200-SMA, a break below which would pave the way toward the 100-SMA that arrives at 0.8855.

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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