The pound may lose the upside momentum and correct lower in the short term
The USD index failed to overcome the 96.00 handle at the start of the week and has been struggling to regain the upside momentum since then. Of note, the greenback hasn’t derived significant support from a rise in 10-year Treasury yields to fresh two-year highs. The euro resumed the upside on Tuesday, erasing yesterday’s losses as the dollar is back under pressure. The EURUSD pair briefly dipped below 1.1300 before bouncing to local highs in the 1.1350 area. However, the prices slipped back to the 1.1330 region in recent trading, suggesting the euro’s upside potential stays limited. The inability to hold above 1.1300 would shift market focus back to the 1.1270 zone, followed by the 1.1235 area. Despite the current weakness, the dollar remains within a broader uptrend and could yet jump to fresh long-term highs in the medium term.
The cable keeps climbing north on Tuesday, with the technical picture improving further after a break above the 100-DMA, currently at 1.3550. The pair advanced to more than two-month highs around 1.3620 and was last seen clinging to the 1.3600 figure. As dollar demand could reemerge at any point, the pound may lose the bullish momentum and correct lower in the short term. In other words, the pair is yet to confirm a break above the mentioned moving average and the 1.3600 level on a daily closing basis. On the other hand, the daily RSI is pointing north but is yet to enter the overbought territory, suggesting there is room for further gains at this point. On the hourly timeframes, there are some signs of waning upside momentum, however.
USDJPY turned positive following four days of losses in a row. The pair bounced from the 115.00 figure to notch intraday highs in the 115.40 area that represents the immediate resistance at this point. Despite the recent recovery, it looks like the dollar would lack the momentum to get back above the 116.00 figure in the short term, with downside risks persisting as long as the prices stay below 115.60. In a wider picture, however, USDJPY is marginally off five-year tops registered in the 116.35 region last week. The recent retreat was triggered by profit-taking at elevated levels, with the broader bullish trend staying intact. On the four-hour charts, the technical picture looks neutral for the time being as the prices are stuck between the 20- and 100-DMAs while the RSI is directionless around the 45 figure.
Gold prices keep trending north for the third day in a row on Tuesday. The XAUUSD pair advanced to local highs in the $1,810 area earlier in the day before correcting to $1,805 in recent trading. Still, the technical picture keeps improving after recovery above the $1,800 handle. Now, the precious metal needs to confirm recovery above this figure on a daily closing basis. Otherwise, the selling pressure could reemerge and bring the prices back below the 20- and 200-DMAs that converge at the mentioned psychological level. On the weekly timeframes, the bullion has turned marginally positive but is yet to climb back to the $1,830 area in order to erase last week’s losses. On the downside, the $1,780 area represents the key support that capped losses on Friday.
USDCHF rallied strongly on Monday to get back to mid-December highs around 0.9275. Today, the demand has cooled, with the pair flirting with the 0.9260 area during the European hours following a dip towards 0.9240 earlier in the day. Now, the prices need to hold above the 0.9200 figure in order to preserve gains and stay afloat following the recent jump. On the hourly charts, USDCHF was last seen trying to regain the 20-SMA, while the RSI is pointing north, adding to a more upbeat technical picture. should the USD index receive a bullish boost in the near term, the pair may challenge fresh local highs and even target the 0.9300 figure for the first time since late November.