The greenback refrains from recovery attempts as traders continue to digest inflation report
The US dollar licks its wounds after a plunge witnessed in response to the inflation report. The rate of inflation retreated to 8.5% year-over-year in July from 9.1% in June, with energy prices falling 4.6% last month and gasoline prices down 7.7%. Softer-than-expected CPI figures raised speculation the Federal Reserve will slow the pace of interest rate hikes next month. The USD index briefly dipped to late-June lows around 104.65 before bouncing back above 105.00 on a daily closing basis. The greenback stays pressured on Thursday, refraining from any recovery attempts as traders continue to digest the CPI report. As such, EURUSD has settled slightly above 1.0300 after a brief jump towards 1.0370, preserving bullish bias for the fourth session in a row. Should the momentum persist in the near term, the pair may retest the mentioned highs. However, in a wider picture, the bullish potential remains limited.
The cable bounced strongly from the 20-DMA on Wednesday to register local highs around 1.2280 before finishing marginally above the 1.2200 mark. The pair retains a modest bullish bias today, adding less than 0.1% on the day. On the four-hour timeframes, the technical picture has improved somehow in recent trading, but the overall upside potential remains limited despite the dollar’s weakness. Furthermore, GBPUSD is yet to break the downtrend that has been dominating since mid-2021. On the longer-term timeframes, the technical picture stays downbeat, with the prices holding below the key weekly SMAs while the RSI struggles for direction. GBPUSD was last seen changing hands around 1.2230, with 1.2200 now representing the immediate support.
After some consolidation just below the descending 20-DMA, USDJPY plunged abruptly on Wednesday amid broad-based sell-off surrounding the US dollar. The pair found a local bottom around 132.00, struggling to attract buying interest during the European trading hours on Thursday. Despite the recent spike in volatility, the dollar remains stuck between the 100- and 20-DMAs. The fact that the prices managed to hold above the 100-SMA suggests the pair stays resilient despite a lackluster performance by the USD index, suggesting the yen bulls stay on the back foot amid the prolonged monetary policy easing by the Bank of Japan. In the near term, USDJPY is likely to further oscillate below 133.00 before deciding on the further direction. The pair could revisit the mentioned 100-DMA, today at 131.20, in the coming days, but a deeper and more prolonged retreat is unlikely at this stage. On the upside, a decisive break above the 20-DMA, today at 135.30, would bring long-term highs above 139.00 back into the market focus.
The price of bitcoin is up more than 30% since the market meltdown in June and keeps trending north these days. At that, the largest cryptocurrency by market capitalization is still down more than 50% from its all-time high late last year. On Wednesday, bitcoin gained 3.51% to finish above the $24,000 figure for the first time since mid-June. The BTCUSD pair retains a bullish bias today, revisiting the $24,600 zone that capped the ascent late last month. The coin is up 2.36% since the start of the day. The latest rally in the cryptocurrency market was due to weak US inflation report that pushed stocks and cryptos higher across the board. In the coming days and weeks, BTC will continue to monitor fresh signals from the Fed and the US economy. Any downbeat signs could disappoint cryptocurrency investors. A failure to regain the $25,000 figure could push the coin back below $20,000.