As long as the euro stays below the 20-DMA, downside risks persist despite the recent bounce from multi-month lows
During The European hours, the dollar pared light intraday gains. EURUSD derived support from the 1.1730 area to recover to the 1.1750 region. Still, the common currency lacks upside momentum to regain upside bias as the greenback remains steady in general. Also, buyers are deterred by the 20-DMA, today at 1.1770. As long as the pair stays below this moving average, downside risks persist despite the recent bounce from multi-month lows seen at 1.660 late last week. On the four-hour timeframes, the prices are stuck between the 100- and 20-DMAs while the RSI looks directionless around the 58 mark, suggesting the immediate technical outlook is neutral for the time being.
The cable struggles for direction, changing hands within a tight trading range on Wednesday. Yesterday, the pair finished marginally higher while facing intermediate resistance around 1.3750. On the downside, the 1.3700 figure is now in market focus. As long as the prices stay above this level, downside risks are limited. The daily RSI now loos directionless in the neutral territory, suggesting the pair keeps losing upside momentum after failed attempts around the mentioned 1.3750 local resistance zone. On the hourly timeframes, the prices are now marginally above the 20-SMA while the RSI has turned directionless, adding to a less upbeat technical outlook.
USDJPY bounced from yesterday’s lows around 109.40 but failed to turn positive on the daily charts. Today, the pair regained upside bias to get back to local highs around 109.85. In the process, the greenback exceeded the 20-DMA but is yet to confirm the breakout on a daily closing basis as the upside momentum looks fragile. As long as the dollar stays below the 110.00 figure, the bullish potential is limited at this stage. On the downside, USDJPY needs to hold above the 109.40 region in order to avoid another sell-off towards last week’s lows in the 109.10 zone. In a wider picture, the pair keeps flirting with the 20-week SMA while retaining a slight upside bias.
The cross has been climbing for the fourth day in a row on Wednesday to exceed the 129.00 figure earlier in the day before trimming intraday gains. The pair now faces resistance represented by the 20 and 200-DMAs which converge in the 129.20 area. It looks like the common currency would need an extra catalyst to overcome this hurdle in the short term. Furthermore, the pair is yet to confirm recovery above the 129.00 level on a daily closing basis. As of writing, EURJPY was changing hands just below this figure, up just 0.12% for the day. On the weekly timeframes, the pair has turned positive these days following three weeks of losses in a row.
USDCHF climbed to the 0.9150 region earlier in the day before paring gains in recent trading. The pair was last seen changing hands in the 0.9130 area where the 20-DMA arrives. If this moving average turns into resistance anytime soon, the dollar could threaten the 0.9100 figure eventually. However, it looks like the downside potential is limited at this stage. Of note, the daily RSI retains a slight bullish bias in the neutral territory, which implies that the pair could refrain from fresh losses in the near term. On the hourly charts, USDCHF is flirting with the 20-SMA, with the overall immediate technical picture looking neutral for the time being.