Weak data won’t be enough to derail the dollar’s wider bullish trend
The dollar came off twenty-year highs while still holding steady. The USD index finished just below the 104.00 mark overnight to come back under some selling pressure on Wednesday as traders take profit ahead of the US CPI report. Should the figures show that US consumer prices have already peaked, USD bulls will be disappointed as slower price growth suggests the Fed could take a more measured approach towards tightening. Still, weak data won’t be enough to derail the dollar’s wider bullish trend. As the buck retreated, EURUSD reversed yesterday’s losses to settle above 1.0550 during the European hours. However, the common currency may lack the upside momentum to regain the 1.0600 mark in the near term, especially as the pair stays well below the descending 20-DMA, currently at 1.0650. The moving average represents the immediate significant barrier for the euro, with short-term downside risks persisting while below the hurdle.
Following four days of losses, GBPUSD saw a local bounce on Wednesday due to a weaker dollar. The pair came off long-term lows seen earlier in the week around 1.2260 to regain the 1.2300 mark. The cable extended gains to 1.2390, refraining from challenging the 1.2400 figure so far. On the four-hour charts, the technical picture has improved as the prices regained the 20-SMA. However, the directionless RSI suggests the upside potential is limited at this stage, with bearish risks persisting. In the immediate term, the pound could exceed the 1.2400 immediate barrier, but the recovery is unlikely to be sustained as USD bulls remain in control across the market. If risk sentiment turns downbeat again, the pound could resume the plunge, with the next target arriving around 1.2300, followed by 1.2250.
USDJPY was rejected from fresh twenty-year tops around 131.35 at the start of the week. The downside pressure reemerged on Wednesday as the USD switched into corrective mode across the market. The pair dipped below the 130.00 mark to find support around 1.2960 during the European trading hours. Should this zone give up anytime soon, the greenback may target the ascending 20-DMA last seen more than two months ago. If this moving average, today at 128.85, withstands the pressure, another bounce north could be expected. Anyway, the uptrend remains intact as long as the 100-DMA, currently at 119.40. On the upside, the resurgent demand would push the pair back above 130.00, followed by the 130.60-130.80 zone. On the hourly charts, USDJPY fell back below the key moving averages while the RSI is flirting with the 30 figure, which implies that there is room for a deeper retreat in the immediate term.
After falling to mid-2021 lows below $30,000, the bitcoin price bounced partially on Tuesday. However, the digital currency failed to attract more solid buying interest and came back under pressure earlier today. The BTCUSD pair is now holding marginally above the $31,000 figure, adding 1.27% on the day. In the near term, both equities and cryptos could receive a boost if the upcoming US inflation data comes in lower than last month’s 8.5%. In general, the outlook for bitcoin deteriorated after the $30,000 psychological support was derailed for the first time in nearly a year. Now, the BTCUSD pair needs to hold above $29,700 in order to regain the upside momentum in the medium term. The immediate upside target arrived at $32,600, followed by $34,300. At this stage, however, risks remain tilted to the downside, as the prices hold well below the key moving averages while the daily RSI is pointing south in the oversold territory.