The euro turned slightly negative on the day in recent trading after a four-day winning streak
The US dollar demand looked subdued at the start of the week. The USD index failed to regain the 110.00 figure to finish slightly lower on Monday, struggling to attract renewed buying pressure as traders turned more cautious ahead of the Fed’s two-day policy meeting. However, the bullish bias reemerged today, pushing the DXY to the 109.80 zone during the European trading hours. Against this backdrop, EURUSD extends its modest upside correction to settle back above the 20-DMA. The euro was last seen flirting with parity, refraining from a more robust recovery. Furthermore, the pair turned slightly negative on the day in recent trading after a four-day winning streak, also suggesting the upside potential remains limited. As such, despite the recent bounce, the euro remains vulnerable to fresh losses in the near term, with the path of least resistance remaining to the downside while below at least the 1.0300 mark where the descending 100-DMA arrives.
The cable plunged back below 1.1500 after another failed attempt to overcome the descending 20-DMA last week. On Friday, the pound saw another sell-off that has pushed the prices below March 2020 lows, down to 1.1350. The pair bounced marginally since then, albeit the recovery momentum looks too modest to bet on more decisive gains at this stage. The pound was last seen trading around 1.1435, adding less than 0.1% on the day. In the near term, GBPUSD needs to hold above 1.1400 on a daily closing basis in order to avoid another retreat. On the upside, should the cable resume its recovery, the next target could be expected around 1.1500, followed by the descending 20-DMA, today at 1.1575. On the hourly timeframes, the RSI has settled in neutral territory, pointing south, suggesting the selling pressure could reemerge in the near term. As such, traders remain focused on the 1.1400 mark.
USDJPY has been retaining a modest bullish bias since the start of the week, holding onto the upper end of the trading range. The pair stays resilient these days, albeit refraining from revisiting 24-year tops registered around 145.00 earlier in the month. The dollar has settled around 143.65 on Tuesday, with the 143.70-143.80 zone representing the immediate resistance at this stage. The USDJPY pair looks set to extend the ascent both in the short- and medium term due to widening divergence in monetary policy as the Bank of Japan keeps maintaining a dovish stance. After some hesitation, USDJPY could climb back to the mentioned tops and refresh multi-year highs beyond 145.00. the next upside target could be expected around 147.00. On the downside, the key near-term support is represented by the ascending 20-DMA, today at 141.30.
The price bounced ahead of the weekend to edge slightly higher on Monday as the buck retreated marginally. The precious metal failed to hold above the descending 20-DMA last week to accelerate the decline eventually. In the process, the bullion derailed the $1,700 psychological level to notch April 2020 lows around $1,654. The XAUUSD pair keeps clinging to the lower end of the range, suggesting extra losses could be in store. On Tuesday, gold prices fell back to the $1,670 zone after another failed attempt to challenge the $1,680 region. A failure to attract demand at the current levels would pave the way to fresh long-term lows in the $1,610-1,600 zone in the coming days or weeks. It seems like gold prices could stay on the defensive in the months ahead as the Fed along with other central banks will continue tightening. A reversal in the gold market would take place once the US monetary authorities start reversing the rate hikes at some point in the future.