Dollar stays afloat ahead of US inflation data
The USD index is nearly unchanged on the day, with the focus gradually shifting towards key US inflation data due on Wednesday. The safe-haven greenback is also underpinned by the dominating risk-off tone in the global financial markets. EURUSD plunged to fresh mid-2020 lows just above the 1.1500 figure on Friday to bounce to the 1.1570 area today. It looks like the common currency would stay on the defensive in the coming days and may see fresh long-term lows if the US inflation figures exceed expectations. The pair was last seen changing hands around 1.1570, up 0.03% on the day. The key short-term resistance is represented by the 1.1600 handle where the 20-DMA arrives. On the downside, the prices need to hold above 1.1550 in order to stay afloat at this point.
The cable plunged to late-September lows ahead of the weekend to find support marginally above the 1.3400 figure. On Monday, dollar demand has cooled somehow, paving the way for a modest bounce in the pair. Still, the recovery potential is being capped by the 1.3500 level during the European hours. In the short term, the pound will likely struggle to see a more robust rebound, with the overall technical picture staying bearish following a major sell-off from the 20-DMA seen last week. On the four-hour timeframes, the technical picture remains negative as well, with the prices struggling below the descending 20-SMA, today at 13550. The immediate support now arrives at 1.3450, followed by more than one-month lows seen at 1.3425 on Friday.
USDJPY saw a bearish week to register local lows around 113.30 on Friday. In the process, the pair dipped below the 20-DMA, adding to a more downbeat technical picture. Earlier today, the prices encountered local resistance in the 113.65 region and retreated, suggesting USDJPY would lack recovery momentum to get back above both the mentioned moving average and the 114.00 figure in the short term. Should the selling pressure reemerge, the greenback could threaten the mentioned lows and even challenge the 113.00 level. However, as long as the pair stays above this figure, the downside potential looks limited at this point. On the hourly charts, the technical outlook has deteriorated further after a break below the 20-SMA earlier in the session.
Gold prices rallied ahead of the weekend to extend gains to two-month highs on Monday. The bullion advanced above the $1,820 area earlier in the day even as the dollar remains steady following recent gains. It looks like the prices could lack the upside momentum to extend the rally as the dollar still looks poised for further gains along with the Treasury yields. The fact that the bullion has settled above the $1,800 figure plays into the bulls’ hands. However, the metal could witness a solid retreat following the recent ascent to push the prices back below the mentioned level in the coming days. On the downside, the immediate support now arrives at $1,810. On the other hand, as long as the prices stay above the key moving average (in the $1.790 region), downside risks are limited at this point.
USDCHF suffered the fifth bearish week to extend losses to early-August lows last week. Since then, the prices exceeded the 0.9100 figure and were last seen flirting with a slightly ascending 200-DMA, today at 0.9150. Should this moving average give up anytime soon, the dollar will retarget the 0.9180-0.9190 area where the 100- and 20-DMAs arrive. The daily RSI is pointing marginally higher, but it looks like USDCHF would lack the recovery momentum to turn the mentioned moving averages into support levels in the near term. On the downside, the key short-term support is represented by the 0.9100 level. As long as the greenback derives support from this region, bearish risks are limited. In a wider picture, the technical outlook looks neutral, with the weekly RSI directionless around the 48 figure.