The euro bounced from the 20-DMA but bearish risks continue to persist
EURUSD
The dollar rallied across the board on Tuesday as the US-China tensions sparked initial demand for safe-haven assets. The USD index rallied back to the 106.50 zone before losing some upside momentum today. The greenback turned negative on the day, threatening the 106.00 mark during the early European hours. As a result, EURUSD fell to the 20-DMA after a brief rally towards the 1.0300 figure that triggered a strong sell-off. In recent trading, however, the euro bounced from the moving average to settle around 1.0180, trading up 0.19% on the day. Should the pair fail to hold above the mentioned SMA, currently around 1.0155, the shared currency may retest the 1.0200 figure in the near term. On the four-hour charts, the pair is stuck between the key moving averages while the RSI looks directionless, suggesting the technical picture could stay neutral in the immediate term, while downside risks continue to persist in a wider picture.
GBPUSD
The cable failed to extend the rally on Tuesday, reversing most of the recent gains. The pair extended losses to the 1.2135 area earlier today before turning slightly positive during the European hours. On the upside, a decisive break above 1.2200 would pave the way towards this week’s peak of 1.2300. In a wider picture, a weaker dollar would open the way towards the descending 100-DMA, currently at 1.2500. However, the pound is yet to break the downtrend that has been dominating since mid-2021, with the overall picture remaining bearish despite the latest bounce. On the weekly timeframes, the technical picture stays downbeat, with the prices holding below the key SMAs while the RSI struggles for direction. GBPUSD was last seen changing hands around 1.2180, up less than 0.1% on the day.
USDJPY
Following four sessions of aggressive gains in a row, the Japanese yen weakened on Tuesday as the greenback rallied across the board. A failure to hold above the 20-DMA last week triggered a massive unwind of the USD gains, with the pair approaching the 130.00 figure for the first time in two months. USDJPY saw fresh local lows in the 130.40 zone, strengthened by a slightly ascending 100-DMA. As the buck bounced across the board, the pair climbed back above 133.00. Should the dollar fail to hold above the mentioned moving average, the selling pressure may intensify dramatically in the days to come. On the hourly timeframes, the technical picture has improved somehow as the prices have settled above the key moving averages while the RSI recovered back into neutral territory. However, the early attempt to regain the 134.00 mark failed, with the dollar slipping back to the flat-line in recent trading.
USDCHF
USDCHF fell to mid-April lows around 0.9470 on Tuesday before bouncing aggressively. The pair finished around 0.9570, extending the ascent today. The dollar was last seen trading just below the 0.9600 mark that represents the immediate barrier for the pair. A decisive break above this level would pave the way towards the 0.9630 zone, followed by the 0.9660 intermediate hurdle on the way towards the 0.9700 mark. The near-term technical picture has improved since yesterday, but it looks like the pair may reverse recent gains easily should the USD index come back under selling pressure. On the shorter-term timeframes, the RSIs have recovered, targeting overbought territory. In general, volatility is likely to persist in the near term, with downside risks persisting at this stage.
