It looks like the pound could suffer deeper losses before a reversal takes place
The dollar index holds steady above the 98.00 figure on Monday while struggling to extend the bounce from local lows in thin liquidity conditions. Earlier in the day, the USD index was rejected from the 98.40 zone, suggesting the upside potential is limited for the time being. EURUSD struggles for direction around the descending 20-DMA, challenging the 1.1150 zone. Should risk sentiment continue to deteriorate further during the session, the euro may retarget the 1.1000 figure that capped the selling pressure late last week. In the immediate term, the euro needs to overcome the mentioned moving average on a daily closing basis in order to regain the 1.1100 figure, followed by last week’s tops around 1.1140. However, it looks like the least path of resistance remains to the downside for the time being as risk demand continues to wane following the recent rally in the global financial markets.
GBPUSD keeps treading water below the descending 20-DMA these days. After a bounce from fresh lows around 1.3000 last week, the pair has settled in the 1.3150 zone during the European hours on Monday, with the 1.3200 immediate bullish target staying in the market focus. As long as the prices stay below this figure, bearish risks continue to persist in the short term. On the four-hour charts, the pound is now flirting with the 20-SMA, while the RSI looks directionless around the 52 figure, painting a neutral immediate technical picture. On the downside, failure to cling to the current levels would pave the way towards the 1.3100 immediate support while the key focus is on the 1.3000 threshold that capped the sell-off last week. In a wider picture, it looks like the pound could suffer deeper losses before a reversal takes place. Should GBPUSD derail the mentioned psychological level for the first time since November 2020, the prices would target the 1.2850 zone next.
USDJPY continues its aggressive rally that took the pair to six-year highs last Friday. The dollar exceeded the 119.00 figure to register fresh tops around 119.40 before retreating marginally. On Monday, the pair retains a strong bullish bias while holding just below the mentioned highs. As the greenback extends the ascent despite the overbought conditions, it looks like USDJPY could rally further, towards the 120.00 psychological level last seen in February 2016. On the hourly charts, the pair is now supported by the ascending 20-SMA while the RSI is pointing slightly lower, suggesting the immediate technical picture looks neutral for the time being. On the downside, the immediate support arrives at 119.00, followed by the 118.60 zone and 118.30.
NZDUSD briefly jumped to the area of November 2021 highs around 0.6920 earlier in the day before correcting below 0.6900 in recent trading. As such, the pair slipped back to the flat-line after failure to confirm a break above the 200-DMA. Despite the retreat, the pair’s tone stays upbeat, with multi-month tops remaining in focus for the time being. Now, the New Zealand dollar needs to regain the 0.6900 level on a daily closing basis in order to retarget the 0.7000 psychological level. On the downside, the immediate support arrives at 0.6865, followed by 0.6840. On the weekly timeframes, the pair is now supported by a slightly ascending 100-SMA, adding to a more upbeat tone as the prices resumed the ascend last week amid US dollar’s weakness. as of writing, the NZDUSD pair was changing hands around 0.6890, unchanged on the day.