The dollar index needs to hold above 107.00 in order to avoid another sell-of
The dollar rallied strongly on Friday after yesterday’s retreat. The USD index is back above the 107.00 figure and could exceed the 107.50 zone in the near term should risk sentiment deteriorate further. EURUSD fell today amid disappointing economic data out of Germany, adding to recession worries after yesterday’s rate hike by 0.5%. The pair slipped back below 1.0200 to extend losses to 1.0130, which implies the shared currency could challenge parity again if the pressure doesn’t abate any time soon. Of note, the buck retreated from intraday highs in recent trading and was last seen holding marginally above 107.00 after another failed attempt to overcome the 107.30-107.40 intermediate barrier on the way towards the 108.00 level. On the downside, the 106.60 support area remains in focus as the US currency looks unstable these days.
The cable switched into defensive mode after yesterday’s positive close as the ascent was capped by the descending 20-DMA that arrives just above the 1.2000 figure. The cable finished off lows on Thursday but failed to extend the bounce today as the dollar regains ground nearly across the board, albeit at a modest pace. The mentioned moving average has been capping gains since early June, suggesting the pair may need extra impetus to overcome the barrier. The cable looks unlikely to overcome this hurdle any time soon, with bearish risks persisting at this stage. The pair was last seen changing hands around 1.1960, down 0.28% on the day. Failure to hold above 1.2000 adds to a more bearish technical outlook in the short term, with the overall trend staying bearish as well. On the shorter-term charts, GBPUSD signals further losses, with key SMAs acting as resistance levels.
USDJPY regained some bullish bias on Friday, staying below the 138.00 figure during the European hours after yesterday’s strong rejection from the 138.90 zone. Earlier today, the dollar derived support from the 137.00 figure, holding off fresh 24-year highs seen around 139.40 last week but stays afloat despite the overbought conditions, refraining from a decisive bearish correction. The pair also continues to hold above the ascending 20-DMA, suggesting USD bulls are still in the game. On the shorter-term timeframes, the RSI looks mixed-to-positive, suggesting the bullish bias could persist in the near term. USDJPY was last seen changing hands around 137.40, up less than 0.1% on the day. In case of profit-taking, the greenback may threaten the 137.00 zone again. In a wider picture, the overall bullish trend remains intact while above at least the 120.00 mark last seen in March.
Gold prices continue to trade in volatile manner these days, with bearish bias persisting. On Thursday, the precious metal briefly dipped to February 2020 lows just below $1,680 before rebounding strongly as dip buyers entered the game at even more attractive levels. As a result, the XAUUSD pair jumped back above the $1,700 figure to finish 0.78% higher. The bullion retains a modest upside bias ahead of the weekend and looks set to finish in positive territory for the first time in six weeks. Still, the metal remains just above fresh long-term lows, struggling amid a stronger dollar and persisting inflation concerns. The technical picture shows gold remains bearish both in the short- and medium term, especially as the prices derailed the $1,680 support zone during the recent sell-off. Now, XAUUSD needs to regain the $1,740 intermediate barrier on the way towards the $1,765 zone, followed by the $1,800 mark last seen more than two weeks ago.