After three days of solid gains, the Australian currency fell on Monday
The US dollar looks steady at the start of the week amid a cautious tone among investors. The USD index is now targeting the 106.00 mark as traders shift focus towards the FOMC meeting minutes due on Wednesday. Should the central bank continue to express a hawkish tone despite a slower inflation, the greenback may receive a fresh boost to stage a rally across the market later in the week. The euro has been under some selling pressure at the start of the week, staying on the defensive after failure to hold above 1.0300 last week. EURUSD has settled below 1.0230 during the European trading hours, holding just slightly above the 20-DMA that could cap the short-term downside pressure at this stage. On the upside, the nearest significant barrier arrives at 1.0470 where the descending 20-week SMA lies. In the immediate term, the pair needs to overcome the 1.0270 hurdle.
The cable has been pressured for the third session in a row on Monday as the dollar extends its broad-based recovery. The pair failed to hold above the 20-DMA and the 1.2100 mark, signaling further deterioration in the near-term technical outlook. GBPUSD dipped to five-day lows around 1.2080 during the European hours. Failure to hold above this intermediate barrier for USD bulls would pave the way towards the 1.2060-1.2050 zone, followed by the 1.2000 psychological level. On the four-hour charts, the downside momentum has intensified after a break below the key moving averages. Adding to a more downbeat tone, the RSI reversed south in neutral territory, suggesting the cable could see deeper losses in the near term. On the longer-term timeframes, the technical picture stays bearish, with the prices holding below the key weekly SMAs while the RSI struggles for direction.
The dollar retains a modest bullish bias on Monday, licking wounds after an abrupt plunge witnessed last week. The pair has recovered above 133.00 since then after finding a local bottom around 131.70. The pair was last seen changing hands around 133.40, up less than 0.1% on the day. 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, 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 could settle in a tight trading range before deciding on the further direction. On the upside, a decisive break above the 20-DMA, today at 134.84, would bring long-term highs above 139.00 back into the market focus. However, the pair is unlikely to overcome the 134.00 level in the near term.
The Aussie fell on Monday after three days of solid gains. The pair peaked around 0.7135, just below the directionless 200-DMA, before losing the upside momentum. As a result, AUDUSD slipped below the 100-DMA to extend losses towards the 0.7040 zone that has been capping losses so far. A failure to hold above this region would add to the selling pressure surrounding the Australian currency in the near term. The next support zone for the pair arrives around 0.6980 where the ascending 20-DMA lies. Adding to a downbeat technical picture, the daily RSI reversed south on neutral territory, which implies that the pair could further lose ground amid a stronger dollar. On the upside, the immediate resistance now arrives at 0.7100, followed by the mentioned 200-DMA. On the longer-term timeframes, the pair is now stuck between the 20- and 200-week SMAs after last week’s rally.