As USDJPY refrains from a more pronounced bearish correction, it looks like the buck could resume the ascent to retest the 131.00 barrier
The dollar looks resilient after some downside correction amid profit-taking on Friday. The USD index is holding above the 103.00 figure, adding 0.37% on the day as risk-off tone has abated but continues to persist across the markets. Also, traders shift focus to the Fed’s meeting that could add to dollar’s strength this week. In the immediate term, the USD index needs to regain the 103.50 local barrier in order to challenge long-term highs around the 104.00 figure that capped the rally last week. On the downside, the nearest support is expected at 103.00, followed by the 102.80 zone where last week’s lows arrive. EURUSD failed to regain the 1.0600 mark on Friday to come under renewed selling pressure that has been capped by 1.0510 today. The pair was sitting around 1.0520 during the European hours, shedding 0.18% on the day.
GBPUSD bounced off fresh mid-2020 lows on Friday to regain the 1.2500 figure on a weekly closing basis. However, as the pair was rejected from 1.2600, the cable failed to stage a more robust recovery, struggling to extend the ascent on Monday. The pound is clinging to the upper limit of the Friday’s range but lacks the momentum to extend recovery, suggesting the prices could dip towards fresh long-term lows after some hesitation. On the four-hour charts, the technical picture looks neutral for the time being, as the prices are holding just above the 20-SMA while the RSI is directionless around 45. On the upside, the key immediate target arrives at 1.2615, followed by the 1.2690 zone. Both in the short- and medium term, risks for the pair remain skewed to the downside for the time being, which implies that the prices could derail the 1.2400 mark to notch fresh long-term lows in the coming days.
USDJPY briefly peaked above 131.00 last week to finish slightly below the 130.00 figure on Friday. The dollar struggles for direction at the start of the week, sitting around 129.85 during the European hours. As the pair refrains from a more pronounced bearish correction at this stage, it looks like the buck could resume the ascent to retest the 131.00 barrier in the coming days, especially as the Federal Reserve is expected to deliver a hawkish rate hike while the Bank of Japan plans to keep interest rates low despite rising inflation. On the hourly timeframes, however, the technical picture has deteriorated somehow in recent trading as the prices fell back below the 20-SMA while the RSI looks directionless in neutral territory. In a wider picture, USDJPY stays resilient despite the overbought conditions, targeting fresh twenty-year highs around 132.00.
Gold prices are back under pressure following a short-lived bounce witnessed ahead of the weekend. The precious metal briefly advanced to the $1,920 zone that capped recovery attempts and sent the prices back below the $1,900 figure on Friday. Today, the XAUUSD pair extended losses to $1,876 and was last seen flirting a slightly ascending 100-DMA that arrives around the mentioned lows. Should the yellow metal settle below this moving average on a daily closing basis, the near-tern technical picture would deteriorate further. On the upside, a decisive bounce above $1,900 would help ease some selling pressure surrounding the bullion. However, it looks like gold prices could see deeper losses in the coming days before a reversal takes place to send the prices back above the 20-DMA (currently at $1,933) eventually.