The near-term technical outlook for the cable has improved somehow but the question is whether it will manage to preserve recent gains
The USD index turned positive on Friday after a two-day slide. The dollar is back above the 104.00 figure but struggles to reverse yesterday’s losses as risk aversion has abated somehow. Now that market players await Powell’s speech, the USD index is trading up nearly 0.7% on the day but struggling to regain the 104.50 zone so far. EURUSD came off local peaks seen around 1.0600, oscillating above 1.0500 in early European deals. The shared currency remains vulnerable at this stage despite the recent bounce from the area of long-term lows registered earlier in the week. The pair was last seen changing hands around 1.0530, down 0.17% on the day. Failure to hold above 1.0500 on a daily and weekly closing basis would imply that the common currency will continue to trade below the 20-DMA, currently at 1.0640. As long as the prices stay under this simple moving average, both short- and medium-term bearish risks continue to persist.
GBPUSD rallied to 1.2400 on Thursday as the dollar retreated across the board. The pair came under some pressure on Friday after two days of solid gains, but still holding above the 1.2300 figure during the European trading hours following a brief dip witnessed in Asia. The near-term technical outlook for the cable has improved somehow recently as the prices managed to stage a robust bounce from fresh long-term lows seen earlier in the week. But the question is whether the pound will manage to preserve the recent gains amid the persistent elevated volatility in the financial markets. On the downside, the immediate support now arrives at 1.2250, followed by the 1.2180 intermediate zone on the way towards 1.2000. At this stage, the downside potential remains limited while above 1.2100. On the four-hour timeframes, the technical picture looks neutral, with the RSI directionless while the cable itself is stuck between the key moving averages.
USDJPY slipped from fresh twenty-year peaks registered around 135.60 earlier in the week. Following a two-day slide, the pair regained the upside momentum and was last seen approaching the 135.00 mark. During the recent sell-off, the buck derived support from the 131.50 zone, followed by the ascending 20-DMA, today at 131.06. The technical picture remains strongly bullish as long as USDJPY stays above this moving average that has been acting as support since the start of June. On the hourly charts, the prices are now back above the key moving averages while the RSI is pointing north, flirting with the 70 figure, suggesting the indicator could soon enter overbought territory. In a wider picture, the path of least resistance remains to the upside as long as the dollar stays above the 120.00 figure last seen in March. Should the prices exceed the mentioned highs, the 136.00 mark will come into the market focus next.
The XAUUSD pair rallied towards the $1,857 zone to finish at the higher end of the trading range on Thursday. However, as the buck attracted renewed demand on Friday, the bullion failed to extend the ascent and turned lower instead, challenging the key moving averages in early European deals. Gold prices are now back below the $1,850 zone, suggesting the selling pressure could persist in the near term, especially as Treasury yields are back on the rise. On the weekly timeframes, gold remains stuck between the 20- and 100-SMAs, with the $1,800 handle representing the key near-term support that capped the downside pressure during the recent slide. On the upside, XAUUSD needs to make a decisive break above the 100-DMA, today at $1,890, in order to shrug off some of the persistent pressure. By the way, gold set for biggest weekly drop in a month after starting it near a one-month peak.