Despite a weaker dollar, the common currency lacks the upside momentum to see a more robust ascent
EURUSD is marginally higher on Wednesday, reversing yesterday’s losses during the European hours as the greenback is back on the defensive despite mixed risk sentiment in the global financial markets. The pair was last seen flirting with the 1.2160 intermediate resistance, a decisive break above which would pave the way towards the 1.2200 barrier for the first time since mid-January. Despite a weaker dollar, the common currency lacks the upside momentum to see a more robust ascent in the short term, so the 1.2130 local support zone remains in market focus for the time being. On the four-hour charts, EURUSD has settled above the key moving averages, suggesting the euro will likely retain a slightly bullish bias for now.
GBPUSD rose to fresh April-2018 highs around 1.4233 earlier in the day before retreating amid profit-taking. The pair has settled in the 1.4150 area since then, staying green on the daily charts. Considering the daily RSI is now in the overbought territory, the upside potential is getting weaker now. On the other hand, the cable could receive another boost and confirm a break above the 1.4200 handle on a daily closing basis if the selling pressure surrounding the dollar intensifies any time soon. On the downside, the immediate support arrives at 1.4100, followed by the 1.4055 area. Of note, the weekly RSI has entered the overbought territory as well, which implies that the pair could see a broader downside correction in the coming days.
USDJPY has accelerated its recovery from one-week lows on Wednesday. The pair spiked to the 105.80 area, now targeting the 106.00 handle. In the process, the dollar has regained the 200-DMA (today around 105.50) which now acts as the immediate support. The daily RSI is pointing upwards while the pair is now above the key moving averages, suggesting the greenback could at least retain a bullish tone in the short term. On the other hand, the inability to derail 106.00 could attract some profit-taking. In this scenario, USDJPY would need to hold above 105.00 in order to avoid a deeper retreat.
Gold prices remain capped by the descending 20-DMA, today at $1,817. The XAUUSD pair is holding marginally above the $1,800 handle that remains in market focus, as a break below this level could bring a more intense selling pressure. On the upside, the bullion needs to make a decisive break above the mentioned moving average in order to retarget the $1,830 region. On the hourly charts, the prices are holding marginally above the descending 200-SMA while the RSI turned directionless in the neutral territory, suggesting the downside potential could be limited in the immediate term. In a wider picture, the technical outlook for gold remains cloudy as long as the prices stay below the 200-weekly moving average.
The cross rallied to fresh late-2018 highs in the 128.75 area on Wednesday, extending the ascent while staying above the ascending 20-DMA for nearly a month already. Now, as the pair has settled above the 128.00 handle, market focus is shifting towards the 130.00 barrier. It looks like the euro could add to gains in the short term as the daily RSI hasn’t entered the overbought territory just yet, suggesting there is room for further upside. Also on the positive side, the common currency remains well above the key moving averages on the weekly timeframes. In the immediate term, however, EURJPY could struggle due to overbought conditions.