The greenback may stage a recovery should the US inflation figures come in better than expected
EURUSD
The euro plunged to fresh mid-2020 lows around 1.1525 on Tuesday amid a combination of a strong dollar and risk aversion. Today, EURUSD managed to stage a local bounce and climbed back to the 1.1565 area as the greenback eased across the board. Should dollar demand reemerge anytime soon, the euro may slip to fresh long-term lows and even threaten the 1.1500 psychological figure. On the upside, the pair needs to make a decisive break above the 1.1580 intermediate resistance in order to regain the 1.1600 figure, followed by the descending 20-DMA, today at 1.1640. The daily RSI has reversed north, correcting from the oversold territory. However, the upside potential could be limited in the short term as the greenback may stage a recovery should the US inflation figures come in better than expected. The immediate support now arrives at 1.1550, followed by the mentioned lows.
GBPUSD
The cable bounced higher on Wednesday following two days of losses. The pair derived support from the 1.3570 area to regain the 1.3600 figure during the European hours. GBPUSD was last seen flirting with the 20-DMA, today around 1.3620. A decisive break above this moving average on a daily closing basis would add to a more upbeat technical picture in the short term. However, it looks like the pound could struggle in the 1.3650 area and erase recent gains should dollar demand reemerge. In a wider picture, the outlook remains bearish as long as the prices stay below the 20-week SMA that arrives at 1.3800. On the hourly charts, the technical picture looks relatively upbeat, as the prices have settled above the key moving averages while the RSI is pointing north but is yet to enter the overbought territory, suggesting there is room for further recovery in the immediate term.
USDJPY
USDJPY peaked at late-2018 highs around 113.80 on Tuesday before correcting lower marginally. Today, the pair struggles for direction while staying above the 113.30 area that represents the immediate support, followed by the 113.00 figure. The daily RSI stays on the overbought territory but the greenback remains afloat, which implies that the pair could resume the ascent following the current consolidation. If the upside pressure reemerges, USDJPY could climb back to the mentioned highs and target the 114.00 figure eventually. On the downside, the bearish potential is limited as long as the prices stay above the ascending 20-DMA (today at 111.20) last seen nearly one week ago. On the weekly timeframes, the dollar has been rising for the sixth week in a row, staying firmly within a broader uptrend.
EURJPY
The cross rallied to fresh April highs around 131.35 on Wednesday as the common currency shrugged off the recent weakness due to a weaker dollar. The pair has been rising for the fifth day in a row to settle above the key moving averages while the daily RSI is pointing north but is yet to enter the overbought territory. Should the common currency extend the ascent in the short term, the cross may exceed the mentioned highs to target the 131.50 next resistance area, followed by the 131.85 zone. On the four-hour charts, the RSI has settled in the overbought territory, suggesting the upside momentum could be limited from here. Should EURJPY proceed to a bearish correction, the prices would get back below the 131.00 figure, followed by the 130.70 region and the 100-DMA that arrives at 130.50.
