The Japanese yen resists the pressure from dollar bulls
USD index received another boost, rallying despite upbeat risk sentiment. The greenback climbed back above the 105.50 zone to refresh twenty-year highs above the 106.00 figure as demand picked up aggressively during the European hours. Against this backdrop, EURUSD plunged below 1.0400 and registered multi-year lows around the 1.0300 mark. The pair was last seen clinging to the lower end of the extended trading range, suggesting the sell-off could continue in the near term despite the oversold conditions. Of note, the daily RSI hasn’t fallen below the 30 figure just yet, suggesting there is room for even deeper losses at this stage as the greenback stays bid across the board. On the shorter-term timeframes, the technical picture looks bearish as well. Market participants express cautiousness ahead of major events including the FOMC meeting minutes and the US jobs market data due later this week.
The cable refrained from decisive recovery at the start of the week and came under renewed selling pressure after some hesitation. However, the pair still stays above the 1.2000 mark which was briefly derailed late last week. Earlier in the day, the pound was trading just above 1.2100 before falling below 1.2050. GBPUSD is also pressured by pessimism surrounding Brexit as EU ambassadors criticized a vote by MPs in the House of Commons to pass a bill that would allow the UK to alter elements of the Northern Ireland Protocol. At this stage, another drop below 1.2000 could be expected in the near term. However, the pair would need further strengthening in USD demand to derail long-term lows seen around 1.1930 in mid-June. On the upside, a decisive break above the 20-DMA would indicate that the weak phase has come to an end. The nearest risk event for the pair would be the FOMC meeting minutes on Wednesday.
USDJPY has been retaining bullish bias on Tuesday, albeit the momentum has been waning during the European hours as the prices have settled around the flat-line after an early jump to 136.35. The dollar was last seen changing hands around 135.70, with the technical picture deteriorating somehow as the prices failed to hold above the 136.00 mark. On the hourly charts, USDJPY is now stuck between the key moving averages while the RSI is pointing south, suggesting the buck could get into negative territory after the early rally faded. In a wider picture, however, the overall bullish trend remains intact, with the prices holding just below 24-year highs seen around 137.00 last month. In the immediate term, the nearest support is represented by the ascending 20-DMA that arrives just above the 135.00 mark. Should the pair derail this moving average on a daily closing basis, the technical picture will deteriorate in the near term.
Gold prices have been on the defensive this week, struggling to stage a solid bounce from the $1,800 mark as the US dollar remains elevated. The XAUUSD pair was last seen changing hands just above this level, losing less than 0.1% on the day. The longer the bullion stays below the descending 20-DMA, currently at $1,829, the higher is the risk of another plunge to the $1,785 zone that has been capping deeper losses so far this year. On the four-hour timeframes, the yellow metal is back below the 20-SMA while the RSI is pointing slightly higher, suggesting the downside potential could be limited in the near term. At this stage, gold prices need to exceed the $1,815 zone on a sustained basis in order to shrug off some of the bearish pressure. However, the path of least resistance remains to the downside for the time being.