The USD index came off the 110.00 mark that capped the recent ascent
The US dollar rallied across the market, both amid strong US data and risk aversion across the globe. The official report showed that US consumer price index rose 8.3% over the prior year and 0.1% over the prior month while economists had expected a decline of 0.1% over the prior month to 8.1% on a yearly basis. Markets have begun pricing in the possibility of a 1% rate hike by the Fed next week after the inflation report. Against this backdrop, the USD index climbed back to the 110.00 mark to come under some pressure on Wednesday following yesterday’s jump by 1.5%. As such, EURUSD slipped back from the 1.0200 zone to settle below both parity and the descending 20-DMA. It looks like recovery attempts in the near term could attract renewed selling pressure surrounding the shared currency.
GBPUSD plunged back below 1.1500 after another failed attempt to overcome the descending 20-DMA on Tuesday. Today, the pair extended losses to 1.1480 zone before turning positive on the daily charts as the US dollar is now retreating after yesterday’s rally. During the recent rally, the cable derailed the descending 20-DMA for the first time in nearly a month and extended recovery to the 1.1730 zone to register fresh September highs before retreating. In the near term, GBPUSD needs to hold above 1.1500 on a daily closing basis in order to avoid another retreat. Otherwise, the pair may fall back below both the mentioned lows and threaten the 1,1400 mark. On the upside, should the cable extend its recovery, the next target could be expected around 1.1585, followed by the 1.1620 zone and the 1.1700 psychological level. However, the pound is unlikely to stage a sustained and robust rally at this stage as dollar demand could reemerge at any point.
USDJPY came under pressure on Wednesday following two days of gains. However, the dollar managed to refresh local highs just below the 145.00 mark before turning negative on the daily charts. The pair failed to preserve the upside bias and came under downside pressure today, albeit staying above 143.00 so far. As such, after an early rally towards 144.95, the prices retreated back below 144.00, threatening the 143.00 support zone now. Still, the pair keeps holding well above the ascending 20-DMA, today at 139.98. The dollar was last seen trading around 143.40, down 0.80% on the day. In the near term, USDJPY needs to hold above the 142.00 mark for a broader bullish momentum to persist. Should the buying pressure surrounding the US dollar reemerge, a decisive rally above 145.00 would bring fresh long-term tops into the market focus.
The Kiwi plunged on Tuesday amid broad-based rally surrounding the greenback. The pair extended losses today to notch fresh May 2020 lows around 0.5975 after failure to hold above the 0.6000 psychological level. NZDUSD bounced marginally since then to settle around 0.6000 while struggling for direction on the daily charts. On the four-hour timeframes, the RSI keeps pointing south but is yet to enter oversold territory, suggesting there is room for even deeper losses in the near term. Adding to a more downbeat technical picture, the pair holds well below the key moving averages both on the short- and longer-term charts. On the upside, the New Zealand dollar needs to regain the 0.6070 immediate resistance, followed by the 0.6120 zone where the descending 20-DMA arrives.
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