USDJPY has been on the defensive for the third session in a row, albeit the pressure looks limited for the time being
The USD index has settled in a tight trading range just above the 105.00 figure which remains in the market focus. The dollar holds steady after a brief rally above 105.50 on Friday. Ahead of the weekend, EURUSD briefly derailed the 1.0370 zone to bounce back above 1.0400 on a daily and weekly closing basis due to dip buyers that prevented the shared currency from falling to fresh long-term lows. On Monday, the pair holds relatively steady, adding less than 0,1% on the day, with market focus shifting towards the FOMC meeting minutes due on Wednesday. The common currency faces the immediate resistance in the 1.0450 zone while the key near-term barrier arrives around 1.0600. The euro may need some weakness surrounding the greenback in order to challenge the handle at this stage. On the downside, the EURUSD pair could derail the 1.0350 key zone if dollar demand persists.
On Friday, GBPUSD briefly plunged below 1.2000 for the first time since mid-June before bouncing partially. Today, the cable challenges the 1.2100 mark, holding slightly positive but lacking the momentum to stage a more pronounced recovery. The pair still needs to overcome the descending 20-DMA, today at 1.2253, in order to shrug off the immediate selling pressure that makes the prices stay around long-term lows seen last month around 1.1930. On the four-hour charts, the pound is flirting with the descending 20-SMA, struggling to attract more robust demand at this stage as the USD remains resilient. Failure to hold above 1.2100 in the immediate term would pave the way towards the recent lows, with the overall trend staying bearish while below the 200-week SMA, currently at 1.3075. GBPUSD was last seen changing hands around 1.2120, up 0.22% on the day.
USDJPY has been on the defensive for the third session in a row on Monday, albeit the pressure looks limited for the time being. The dollar is flirting with the ascending 20-DMA, last seen one month ago. Should the moving average fail to withstand the pressure, deeper losses could lie ahead. Now that the prices are back below 136.00, the upside momentum could wane further, especially as the USD derailed the 135.00 figure along with the mentioned SMA. Should the selling pressure persist in the near term, USDJPY may target the 134.20 intermediate support on the way towards the 133.00 mark. However, the bullish trend remains well and sound for the time being, and the buck could attract renewed demand at lower levels to get back above 136.00 eventually. At the current levels, the dollar still looks extremely overbought, trading just below fresh 24-year highs registered last week around the 137.00 mark.
The Kiwi plunged to May 2020 lows just below the 0.6150 zone on Friday as the US dollar rallied across the market. As the pressure has eased, the pair bounced above 0.6200 on Monday while still staying vulnerable after the recent sell-off. NZDUSD is likely to see even deeper losses should USD demand pick up again, with 0.6000 mark coming into the market focus. On the hourly timeframes, the New Zealand dollar is now back above the key moving averages, but the recovery momentum looks too modest to bet on a more robust ascent in the near term. The immediate upside target now arrives at 0.6260, followed by the 0.6300 mark, strengthened by the descending 20-DMA that has been capping gains for nearly a month already. As such, despite the oversold conditions, the path of least resistance remains to the downside while below the simple moving average.