It looks like the common currency could slip to fresh mid-2020 lows and threaten the 1.1400 figure
The greenback corrects lower nearly across the market on Monday as traders take profit after a strong rally triggered by unexpectedly high inflation figures that could make the Federal Reserve start hiking interest rates earlier than anticipated. As such, the USD index started the week on a negative footing, revisiting the 95.00 region. Still, EURUSD lacks the recovery momentum to get back above the 1.1500 figure while holding just slightly off long-term lows seen around 1.1430 ahead of the weekend. The pair has settled in the 1.1450 area ahead of fresh economic data. It looks like the common currency could slip to fresh mid-2020 lows and threaten the 1.1400 figure if the dollar refrains from a deeper correction in the near term. On the upside, the immediate resistance is represented by the 1.1585 area, followed by 1.1500.
The cable dipped to fresh 2021 lows around 1.3350 on Friday before bouncing back into positive territory. However, the pair struggled to extend the upside correction at the beginning of the week, changing hands marginally above the 1.2400 figure during the European hours on Monday. Earlier in the day, GBPUSD was rejected from the 1.3440 region that now represents the immediate bullish target. In a wider picture, the pound remains on the defensive, with downside risks persisting as long as the prices stay below the 1.3550 area, followed by the descending 20-DMA, today at 1.3630. On the four-hour charts, the RSI is pointing south while the prices struggle to stay above the 20-SMA, suggesting the path of least resistance remains to the downside at this point.
The Japanese yen remains on the defensive to start the week even as the US dollar retreats from fresh 2021 peaks seen last week. The pair peaked at 114.30 on Friday before retreating below 114.00 eventually. Today, the prices are oscillating around this level, struggling for direction during the European hours. Should USD demand reemerge anytime soon, the prices may get back above the 114.00 figure to extend the ascent to the 114.45 area, followed by the 114.70 region. The pair needs to hold above the 20-DMA (today at 113.80) in the short term in order to stay afloat and resume the advance to the mentioned highs. On the downside, the key support is expected around 112.70 where last week’s lows arrive.
Gold prices advanced to five-month highs around $1,868 on Friday to see strong weekly gains. Today, the XAUUSD pair turned lower, correcting from the mentioned peaks amid slightly overbought conditions. Still, the bullion remains above the $1,850 region, suggesting the bearish potential is limited for the time being, with the overall upside trend persisting. Should demand for the yellow metal reemerge anytime soon, the prices could challenge the mentioned multi-month highs and derail the $1,870 region to target the $1,900 figure. On the downside, the immediate support is now represented by the $1,850 area, followed by the $1,830 zone and the $1,800 psychological figure. As long as the yellow metal stays above this level, the upside risks persist.
The Aussie has been in recovery mode since Friday when the pair bounced off five-week lows around 0.7275. On Monday, AUDUSD advanced to the 0.7360 region, struggling to challenge a slightly descending 100-DMA, today at 0.7365. Should this moving average give up anytime soon, the 20-DMA (today at 0.7440) would come back into the market focus. For the time being, it looks like the recovery potential could stay limited despite a bullish bias in the daily RSI. On the hourly charts, the pair is stuck between the key moving averages, with the RSI holding in the overbought territory, which implies that the prices could come under selling pressure in the near term. On the downside, the immediate support arrives at 0.7325, followed by the 0.7300 figure.