The USD index turned slightly negative amid profit-taking
The USD index peaked at 113.60 earlier in the day to turn negative in recent trading amid some profit-taking. Now, market participants shift their focus towards the US CPI report due on Thursday. Should the figures come in higher than expected, the dollar will rally across the market due to rising rate hike bets. The EURUSD pair failed to regain parity during the latest rally as the 1.00 mark prevented the euro from a more robust ascent. The shared currency fell below 0.9700 on Tuesday before bouncing marginally today as dollar demand has eased nearly across the market. The shared currency has settled around 0.9730 in early European deals on Wednesday, adding 0.26% on the day. The pair is unlikely to make a decisive break above the 1.00 handle any time soon, with downside risks persisting for the time being, especially as the prices are back below the descending 20-DMA.
The cable extended losses to the 1.0920 zone early on Wednesday before entering positive territory in recent trading. The pair is trying to stage recovery after five bearish sessions in a row, but the upside potential looks limited at this stage. Earlier this month, the rally for the pair was capped by the 1.1500 figure, pushing the prices back below 1.1000. Since then, GBPUSD stays below below the descending 20-DMA, suggesting the bearish potential continues to dominate at this stage. As such, the cable could stay on the defensive in the near term, especially as the prices hold below the mentioned moving average, currently at 1.1150. GBPUSD was last seen flirting with the 1.1000 figure. Should the prices fail to regain this level any time soon, the pair could retest the mentioned lows, followed by the 1.0900 mark.
USDJPY has been rallying for the sixth session in a row on Wednesday. The pair exceeded the 146.00 figure for the first time in 24 years to extend the ascent to the 146.40 zone. The dollar was last seen changing hands around 146.10, up 0.18% on the day. As such, the greenback continues to hold steady after the recent jump and could target fresh long-term highs in the near term. Now, USDJPY needs to confirm a break above 146.00 and refrain from a major retreat amid overbought conditions. On the downside, the immediate support now arrives at 145.40, followed by the 145.00 figure. On the four-hour timeframes, the RSI is correcting slightly from overbought territory, suggesting the rally could pause for a while. Still, the overall technical picture remains strongly bullish.
Gold prices fell back below $1,700 last week and have been pressured since then. The XAUUSD pair extended losses to the $1,661 zone before bouncing marginally on Wednesday. The precious metal remains on the defensive amid a stronger dollar that remains the preferred safe-haven asset amid risk-off sentiment dominating global financial markets. Gold prices could face renewed downside pressure to challenge the $1,660 support zone, a break below which would pave the way towards the $1,645 intermediate barrier for USD bulls. Next, the market focus would shift towards April 2020 lows seen around $1,614 in late-September. The bullion bounced from local lows to settle above $1,670, flirting with the 20-DMA. However, the precious metal is unlikely to make a decisive recovery above this moving average any time soon as the overall bullish potential remains limited from the technical point of view.