The pressure surrounding the dollar looks limited, as the euro struggles to extend the recovery
EURUSD bounced from the 1.1705 area on Wednesday to trim some losses as the dollar retreated marginally amid a lower-than-expected US inflation. However, the pressure surrounding the dollar looks limited, as the euro struggles to extend the recovery, trading in the negative territory on Thursday. At this stage, the 1.1750 region represents the immediate upside barrier, a decisive break above which would pave the way towards the 1.1800 handle. On the four-hour charts, the common currency is trying to hold above the 20-SMA while the RSI is pointing slightly lower in the neutral territory, suggesting the pair could come under renewed selling pressure in the short term before staging a reversal.
The cable derived support from the 1.3800 figure on Wednesday to stage a local bounce as dollar demand has eased somehow after climbing to fresh multi-week highs. The cable now faces the immediate barrier at 1.3880. A break above this area would pave the way towards 1.3900, followed by the 100-DMA that arrives at 1.3923. This moving average represents the key barrier for sterling bulls at this stage. As long as the prices stay below this level, the upside risks are limited. On the hourly timeframes, the pound is now back under the 100- and 20 SMAs. The pair was last seen changing hands around 1.3850, unchanged for the day. In a wider perspective, GBPUSD remains confined to a relatively tight trading range on the weekly charts.
USDJPY briefly jumped to the 110.80 region for the first time since early-July on Wednesday but failed to preserve the momentum and retreated to finish lower. Today, the pair struggles to see a more robust recovery, staying below the 110.50 area that represents the immediate resistance. On the downside, the 110.30 region represents the nearest support. A break below this figure would pave the way towards the 110.00 level, followed by the 20-DMA that arrives at 109.93. As long as the greenback holds above this moving average, downside risks are limited. Furthermore, the daily RSI is pointing slightly higher in the neutral territory, suggesting the path of least resistance is to the upside for the time being.
The cross has been trending slightly higher for the third consecutive day on Thursday, flirting with the 20-DMA that continues to cap gains as the bullish potential surrounding the common currency is limited. The pair faces a local barrier in the 129.70-129.80 area that caps the ascent towards the 130.00 figure last seen a week ago. Of note, this level prevented the euro from further gains then, suggesting EURJPY would need an extra catalyst to turn 110.00 into support. On the hourly charts, the immediate technical picture looks neutral while the 100-SMA (today at 129.60) represents the nearest target for yen bulls. In a wider picture, the pair continues to gradually decline from the 20-week SMA while also holding off the lows seen last month.
NZDUSD encountered resistance in the 0.7060 area on Wednesday and has been struggling to extend the recovery since then. The pair turned marginally lower on the day in recent trading and was last seen changing hands around 0.7030. The prices remain stuck in a range between the key moving averages, with the 20-DMA, today at 0.6990, continues to act as support. As the New Zealand dollar failed to overcome the mentioned resistance during the recent recovery, it looks like upside risks would stay limited in the short term. On the upside, the 200-DMA around 0.7100 represents the key barrier. Of note, the pair has been staying below this moving average since mid-June and could continue to cap gains in the medium term.