The common currency could stay on the defensive for the time being
The dollar has steadied on Friday following a strong rally witnessed yesterday. Still, the greenback had to give away part of the recent gains on Friday. As such, the euro bounced from the 1.1750 area to 1.1785. However, the pair failed to extend the recovery and retreated partially in recent trading, suggesting the common currency could stay on the defensive for the time being. The key immediate upside target now arrives at 1.1800. However, as the dollar remains resilient, it looks like the EURUSD pair would finish the week below this figure. On the hourly charts, the technical picture has improved somewhat, as the RSI has reversed north while the prices have settled above the 20-SMA. However, the upside potential is limited in the immediate term, with bearish risks persisting as long as the common currency stays below the 1.1800 figure.
The cable dipped to one-week lows around 1.3765 on Thursday amid broad-based demand for the dollar. Earlier today, the pair tried to proceed to recovery but encountered a local barrier in the 1.3812 area to get back below the 1.3800 level during the European hours. The pound was last seen changing hands around 1.3780, down less than 0.1% on the day. In the immediate term, GBPUSD needs to regain the 20-DMA in order to shrug off weakness. Otherwise, deeper losses could lie ahead. In a bearish scenario, the cable may slip back to the mentioned lows and even extend the decline towards 1.3750, followed by the 1.3725 region. In a wider picture, the bullish potential has been capped by the 20-week SMA since June, and it looks like the prices will stay below this barrier in the days and weeks to come as the greenback could stay on the offensive due to a hawkish tone from the Federal Reserve.
USDJPY briefly plunged to one-month lows just above the 109.00 figure earlier in the week. On Friday, the pair extends yesterday’s gains and was last seen nearing the 110.00 key figure. In the process, the dollar regained the 20- and 100-DMAs while the RSI continues to point higher, suggesting the greenback would at least stay afloat in the near term. However, USDJPY may need an extra impetus to regain the 110.00 figure on a daily and weekly closing basis. If this figure turns back into support, the next upside barrier should be expected around 110.15 where this week’s highs arrive. On the downside, the immediate support arrives in the 109.85 area where the mentioned moving averages converge. As long as the prices hold above this region, bearish risks are limited.
Earlier in the week, the bullion climbed to weekly highs in the $1,808 area where the 200-DMA capped gains. As a result, the precious metal retreated to accelerate the decline on Thursday amid broad-based strength surrounding the greenback. The bullion extended losses to $1,745 yesterday before bouncing back above the $1,760 area on Friday, still lacking recovery momentum as the dollar remains strong and elevated ahead of the next Fed meeting due next week. The XAUUSD pair was last seen changing hands around $1,765, targeting the $1,780 immediate upside target followed by the $1,800 key barrier, strengthened by the 20-DMA. It looks like the yellow metal would need an extra catalyst to challenge this hurdle in the coming days, with downside risks persisting following the recent sell-off.