USDJPY failed to capitalize on the dollar’s strength, threatening the 135.00 mark on Wednesday
The USD index has steadied after yesterday’s rally towards fresh multi-year tops around 106.80. The greenback has settled just below the 106.50 zone in early European deals, refraining from a more pronounced correction despite the overbought conditions and some improvement in risk sentiment. Now, traders shift their focus to the FOMC meeting minutes, which is expected to sound hawkish. EURUSD fell to the lowest levels since 2002 around 1.0235, staying under pressure on Wednesday. Recovery attempts have been capped by the 1.0280 zone so far, with the shared currency clinging to the lower end of the extended trading range. Of note, the daily RSI hasn’t entered the oversold territory just yet, suggesting the pair could fall further before finding a bottom as the buck remains elevated nearly across the market. On the four-hour timeframes, the technical picture looks extremely bearish, with the parity level coming into the market focus for the first time in twenty years.
Similarly, the cable fell to fresh March 2020 lows just below the 1.1900 mark on Tuesday. The pair struggles to stage any significant recovery since then, holding below the 1.2000 level that represents the immediate upside target for the time being. Should the pressure reemerge, the pound could threaten the 1.1830 zone next. On the upside, a decisive break above 1.2000 would help ease the bearish pressure somehow, but the near-term technical outlook would stay extremely downbeat while below the descending 20-DMA, today at 1.2190. On the weekly timeframes, the RSI has entered the oversold territory but continues to point south, which implies that the prices could see even deeper losses before reversing higher eventually. A significant medium-term upside target arrives at 1.3070 where the 100-week SMA lies.
USDJPY failed to capitalize on the dollar’s strength yesterday. The pair briefly jumped to the 136.35 zone before trimming modest intraday gains. Furthermore, the US currency came back under pressure on Wednesday, flirting with the ascending 20-DMA again. A decisive break below this moving average, currently at 135.20, would pave the way towards the 134.70 intermediate support on the way to the 134.30 zone. On the hourly charts, the pair failed to hold above the key moving averages that converged around 135.60 earlier in the day. Failure to regain the SMAs would open the way below 135.00 in the immediate term. However, the downside potential looks limited as well, with the key support arriving at 133.80. In a wider picture, the overall bullish trend remains intact while above at least the 120.00 mark last seen in March.
USDCAD briefly rallied to late-2020 highs around 1.3080 before finishing in the 1.3030 zone on Tuesday. Today, the pair retains a bullish tone, holding above the 1.3000 psychological level, suggesting there may be room for further gains in the near term. Now that the USD has settled well above the ascending 20-DMA while the daily RSI retains a modest upside bias while also staying in neutral territory, the pair is likely to extend the ascent beyond 1.3000 before finding a long-term top that would cap further gains. Adding to a more upbeat technical picture, the pair exceeded the 200-week SMA again, but is yet to confirm the latest breakout on a closing basis as the current levels may attract some profit-taking at this stage. USDCAD was last seen changing hands around 1.3046, up just 0.1% on the day after a jump by nearly 1.5% in the previous session.