Gold prices have settled around $1,700, struggling for direction
The US dollar extended gains to notch fresh twenty-year highs on Wednesday amid a combination of risk aversion, strong economic data out of the US and rising Treasury yields. The services PMI reinforced the case for rate hikes, with markets now pricing in a nearly 80% chance that the Fed raises rates by 75 basis points later this month. The USD index extended the rally to110.70 before retreating marginally in recent trading. The buck is likely to continue the ascent in the near term despite overbought conditions. The index was last seen changing hands around 110.35, up 0.12% on the day. EURUSD fell to fresh lows around 0.9855 before rebounding back above 0.9900 on Wednesday, a decisive break above which would pave the way towards parity. In a wider picture, the euro needs to overcome the descending 20-DMA, today at 1.0037, in order to see a mode decisive and sustained recovery.
The pound fell towards fresh March 2020 lows around 1.1443 at the start of the week before bouncing back above 1.1500. However, the pair failed to extend the momentum and came under renewed selling pressure on Wednesday. After a brief dip towards 1.1450, the cable has settled just below the 1.1500 mark during the early European hours, shedding 0.14% on the day. The pair stays below the 1.1600 figure following the latest slump, with bearish potential persisting at this stage, especially as the pair stays well below the descending 20-DMA, today at 1.1790. The immediate upside target now arrives at 1.1525, followed by the 1.1610 zone. On the four-hour charts, the bearish momentum has eased somehow as the RSI points higher in neutral territory, suggesting the selling momentum could slow down at this stage.
The yen is trading down to fresh lows since 1998 on Wednesday. USDJPY exceeded the 143.00 figure a day earlier to extend the ascent to the 144.40 zone today. As a result, the daily RSI extended the ascent in overbought territory, but the pair is likely to continue the rally in the near term, targeting the 145.00 mark. As such, the pair keeps rallying while holding well above the ascending 20-DMA, today at 137.57. The dollar was last seen trading around 144.05, up 0.89% on the day. In the near term, USDJPY needs to hold above the 144.00 mark for the overall bullish momentum to persist. A decisive rally above the mentioned highs would bring fresh long-term tops into the market focus. The next major target for USD bulls now arrived at 147.00. On the downside, the prices could get back below 142.75 in case of profit-taking.
Gold prices briefly jumped to $1,726 before coming under pressure on Tuesday. Today, the XAUUSD pair struggles for direction around $1,700 while trading with a modest bullish bias in Europe. Last week, the bullion fell to nearly 1.5-month lows around $1,688. The technical picture has improved somehow after the precious metal regained the $1,700 figure, but the overall the outlook on the weekly timeframes still looks bearish. After the latest sell-off, the XAUUSD pair bounced due to a dip-buying strategy while the dollar remains elevated, capping recovery potential in the gold market. The yellow metal regained the $1,700 figure but is yet to confirm the breakout and get back above the $1,730 intermediate barrier in order to see more robust recovery. The daily RSI reversed north, bouncing from the 30 mark, suggesting the prices could retain a bullish bias in the near term. Should the selling pressure reemerge any time soon, XAUUSD would easily fall back below $1,700 and could threaten the $1,680 zone that helped cap the decline in July.