The shared currency is unlikely to get back above parity any time soon as dollar demand could reemerge after some correction
The dollar corrects lower across the board after yesterday’s jump to fresh multi-year highs around 114.50. The USD index has settled around 113.60 in early European deals, losing nearly 0.5% on the day. However, the overall bullish tone surrounding the US currency is likely to persist as long as the Federal Reserve continues its rate-hiking cycle. As such, the safe-haven greenback could resume the ascent after a pause to challenge fresh long-term peaks, this time around 115.00. The immediate support now arrives around 113.00, followed by the 111.80 zone. On the upside, a decisive bounce above 114.00 would bring the 114.50 region back into the market focus. The EURUSD pair bounced off long-term lows to regain the 0.9600 mark. However, the shared currency is unlikely to get back above parity any time soon as dollar demand could reemerge after some correction.
The cable plunged to historic lows at the start of the week before bouncing partially. GBPUSD fell to the 1.0350 zone to trim losses to 1.0690 later on Monday. Despite the subsequent bounce, the pair stayed negative on the day, licking wounds after aggressive sell-off. The pound was also pressured by concerns over the UK’s fiscal package as traders doubted that new measures, including tax cuts, could cure the British economic problems. On Tuesday, the pair extended its recovery to regain the 1.0800 mark. In the near term, the cable could stay on the offensive amid persistent oversold conditions. Should the prices fall back below 1.0500, however, the pair could threaten the 1.0300 next support zone, followed by the 1.00 mark. On the hourly timeframes, the RSI remains in neutral territory, pointing north while the cable has settled slightly above the directionless 20-SMA.
USDJPY keeps recovering after last week’s decline from 24-year tops seen just below 146.00. The dollar briefly fell to 140.35 before bouncing back above the ascending 20-DMA. As such, the pair refrained from a major slump to regain the bullish bias that brought the prices back above 144.50 on Monday. The pair finished above the mentioned 20-DMA, staying above 144.00 on Tuesday. USDJPY, however, gave up some of the recent gains as the greenback is pressured across the board. The pair was last seen changing hands around 144.30, down 0.29% on the day. In a wider picture, the USDJPY pair looks set to extend the ascent in the medium term. After some hesitation, USDJPY could climb back to the mentioned tops and refresh multi-year highs beyond 146.00.
Gold prices traded lower extended the decline at the start of the week, holding below the $1,700 psychological level since mid-September. Earlier this month, the bullion fell below the descending 20-DMA, attracting more intense selling pressure. The XAUUSD pair fell below $1,640 mark for the first time since April 2020 before rebounding marginally. The yellow metal fell to fresh lows around $1,621 on Monday to settle around $1,635 since then, trying to regain bullish bias on Tuesday. However, recovery potential looks limited as the dollar stays strong despite the retreat. In the coming days and weeks, XAUUSD is likely to hold below the $1,700 mark, with downside risks persisting while below the mentioned 20-DMA, today at $1,686. As such, the moving average strengthens the $1,700 resistance zone at this stage.