EURUSD is holding marginally above the parity, with downside risks persisting despite the oversold conditions
EURUSD
The US dollar has steadied after another rally towards fresh multi-year tops on Tuesday. The USD index extended gains to 108.55 before retreating marginally. Still, the price was holding above the 108.00 mark in early European deals, suggesting the greenback could continue its ascent after short-lived consolidation. Strong inflation numbers could add to the bullish tone surrounding the US currency later in the day. The data is expected to show that consumer prices hit a fresh pandemic peak last month, marking the largest jump since 1981. Should the June CPI show headline inflation rise above May’s 8.6% level, the release could push the buck through the mentioned tops towards the 109.00 next bullish target. EURUSD is holding marginally above the parity, treading water around the flat-line, with downside risks persisting despite the oversold conditions.
GBPUSD
The cable plunged to fresh March 2020 lows just above the 1.1800 mark on Tuesday before reversing most of the intraday losses due to some profit-taking in the overbought greenback. The pair briefly jumped to the 1.1935 area early on Wednesday but failed to preserve the recovery momentum and retreated in recent trading, changing hands just below the 1.1900 mark that now represents the immediate target for the British currency. The fact that the daily RSI hasn’t entered oversold territory just yet, suggests the pound is likely to see even deeper losses at this stage before staging a reversal eventually. On the four-hour timeframes, GBPUSD stays below the descending 20-SMA while the RSI continues to target south, which implies that the UK currency has room for further losses in the immediate term.
USDJPY
At the start of the week, USDJPY exceeded the 137.00 mark for the first time in 24 years to notch fresh tops around 137.75 before retreating marginally amid profit-taking. The pair stays elevated but refrains from challenging the mentioned highs since then. After a short-lived and modest downside correction witnessed yesterday, the dollar is back in positive territory as the bulls remain in the game, which implies that the pair hasn’t peaked just yet. The greenback remains on the offensive, holding just above the 137.00 mark during the European hours on Wednesday. For now, the path of least resistance remains to the upside, especially as the daily RSI remains in neutral territory. Should the dollar come under pressure in the near term, the nearest support is expected at 136.60, followed by the ascending 20-DMA, today at 135.77. On the hourly charts, the pair climbed back above the 20-SMA. In a wider picture, the overall bullish trend remains intact while above at least the 120.00 mark last seen in March.
USDCHF
USDCHF came under pressure following nine bullish days in a row. The pair was rejected from one-month highs around 0.9860 to finish nearly unchanged on Tuesday. Today, the dollar slipped below 0.9800, holding above the 0.9775 support area so far. Should this zone give up any time soon, the prices may target the 0.9725 intermediate barrier on the way towards a slightly descending 20-DMA, today at 0.9663. The near-term bullish momentum persists while above the moving average. In general, USDCHF is unlikely to extend the bearish correction as the US currency remains elevated and could fresh long-term highs due to the Fed’s aggressive tightening strategy. On the four-hour charts, however, the technical picture has deteriorated somehow as the RSI reversed lower while the pair itself fell below the ascending 20-SMA for the first time since late-June. In other words, the pair could see a slightly deeper retreat in the immediate term before resuming the ascent towards the 1.00 mark that deterred buyers one month ago.
