The euro is yet to confirm the latest breakout on a daily closing basis, with downside risks persisting in a broader picture
The USD index lacks directional impetus around 106.50, struggling to regain the 107.00 mark despite the dominating risk-off tone in the global financial markets. The greenback lacks the momentum to stage a bounce after a bearish week that took the prices off the 108.00 figure. Should the Fed deliver a less hawkish rate hike this week, the US currency may suffer even deeper losses within a broader uptrend that remains intact. The euro regains ground at the start of the week, regaining the 1.0200 region during the European hours. The EURUSD pair was last seen changing hands around 1.0244, up 0.33% on the day. Should the buying pressure persist in the near term, the shared currency may target the 1.0280 zone that capped recovery last week. On the hourly timeframes, the technical picture has improved since the recovery above 1.0200. However, the pair is yet to confirm the latest breakout on a daily closing basis, with downside risks persisting in a broader picture.
The cable switched into defensive ahead of the weekend finished the week on positive footing. Oи Monday, the pair regained the 1.2000 psychological level. Now flirting with the 20-DMA. The moving average has been capping gains since early June, so confirmation of a breakout (on a daily closing basis) would add to a more upbeat technical picture in the near term. GBPUSD was last seen changing hands around 1.2040, up 0.32% on the day. Failure to hold above 1.2000 would bring the cable back under pressure, with the overall trend staying bearish. On the shorter-term charts, GBPUSD signals further gains, but the overall upside potential remains limited. The immediate upside target arrives around 1.2065, followed by the 1.2100 mark last seen three weeks ago. On the downside, long—term lows below 1.1800 remain in the market focus while below the 1.3000 level.
As the dollar struggles to attract renewed demand, USDJPY holds just modestly higher on Monday, trading above 136.00 during the European hours after a brief dip earlier in the day. However, the pair stays above the 135.50 zone that capped losses last week. The greenback stays within a broader uptrend despite coming off multi-year highs seen above 139.00 earlier this month. USDJPY ignored the news that the Bank of Japan is reshuffling its board members to bring in two new hawkish members, with the pair recovering ground above the 136.00 figure at the start of the week. A decisive break above 136.60 would pave the way towards the 137.40 intermediate barrier on the way towards the 138.00 mark. On the downside, failure to hold above 135.50 could send the greenback to fresh local lows below 135.00, with the key support arriving at 134.30. On the shorter-term timeframes, the upside bias looks too modest to bet on solid gains in the near term, with the 136.00 figure remaining in the market focus at this stage.
The Aussie jumped north on Monday after two days of losses in the second part of last week. The pair climbed from the 0.6900 figure to the 0.6950 zone and was clinging to the upper end of the intraday trading range during the European hours. The next upside target arrives around 0.6980 where last week’s highs lie. A decisive break above this region would add to a more upbeat technical picture in the near term. On the shorter-term timeframes, AUDUSD looks likely to at least retain bullish bias at this stage. However, the overall recovery potential remains limited. Furthermore, a mode decisive bounce could attract renewed selling pressure as the longer-term technical outlook for the Australian currency remains bearish while below at least the 0.7500 mark last seen in April.