Should the pound exceed the 1.2300 mark in the near term, the descending 20-DMA will come back into the market focus
After peaking at fresh two-decade highs in the 105.80 area last week, the dollar retreated marginally amid profit-taking. On Monday, the USD index trades lower after a failed attempt to regain the 105.00 mark ahead of the weekend. The greenback has settled around 104.45 during early European hours, shedding 0.25% on the day. Despite some downside correction, the US currency remains on the offensive as the Fed continues to outperform other major central banks, tightening its monetary policy aggressively. As such, the euro looks unlikely to see a robust rebound at this stage despite the ECB is getting more hawkish as well. EURUSD is now back above the 1.0500 figure, but the overall outlook remains bearish in the short term. On the upside, the key target remains represented by the descending 20-DMA that arrives at 1.0630, followed by the 1.0800 mark that has been capping gains since last month. Still, the path of least resistance remains to the downside at this stage.
The cable is back in positive territory on Monday after a plunge witnessed ahead of the weekend. The pair is now regaining ground above the 1.2200 figure, struggling around the 1.2260 zone that represents the immediate upside barrier for the time being. Should the pound exceed the 1.2300 mark in the near term, the descending 20-DMA, today at 1.2435, will come back into the market focus. However, the pair is unlikely to regain this moving average anytime soon as the greenback remains buoyed despite some retreat. In the four-hour charts, GBPUSD is inching higher, holding above the ascending 20-SMA, but the directionless RSI in neutral territory suggests the upside potential is limited from here. On the downside, the immediate support now arrives at 1.2200, followed by 1.2170 and the 1.2130 region. In a wider picture, bearish risks persist as long as the prices stay below the 200-week SMA, today at 1.3080.
USDJPY rallied back to the area of long-term highs on Friday to finish just a few pips below the 135.00 handle. Today, the pair turned marginally negative after a failed bullish attempt during the Asian session. The dollar was last seen changing hands around 134.75, shedding 0.14% on the day. The nearest support now arrives at 134.00, followed by 133.80 and the 133.00 mark. The daily RSI turned slightly lower today. But the overall technical picture remains bullish, especially as the buck refrains from a deeper bearish correction despite the extremely overbought conditions. Adding to positive outlook, the pair stays above the ascending 20-DMA, currently at 131.40. On the hourly timeframes, the technical picture looks neutral at this stage, with the RSI directionless around the 52 figure while the prices are stuck between the key simple moving averages.
USDCHF is back under pressure after a short-lived and modest bounce witnessed ahead of the weekend. The pair seems to have found a short-term bottom around 0.9620 late last week and could retest this zone if the pressure persists in the near term. On the upside, USDCHF needs to overcome the 20-DMA, today at 0.9710, in order to stage a more decisive recovery towards three-year lows seen last month around 1.0065. On the longer-term charts, the technical picture has deteriorated over the last two weeks, with the weekly RSI suggesting the dollar could continue to struggle for some time. However, the bearish potential is limited as long as the prices stay above the 0.9511 zone where the 20- and 200-week SMAs converge. As of writing, the dollar was changing hands around 0.9640, down 0.6% on the day. The nearest upside target now arrives at 0.9665, followed by the mentioned 20-DMA.