European gas crisis adds to a downbeat tone surrounding the common currency
The US dollar retains its bullish tone at the start of the week, clinging to the upper end of the extended trading range market by 20-year highs refreshed around 107.80 last week. After a short-lived correction amid profit-taking, the USD index regained the 107.00 figure, adding 0.4% on the day. The price was last seen flirting with the 107.50 zone that represents the immediate barrier for buyers.
The greenback is helped by its safe-haven status as Asian markets traded mixed today, with Chinese stocks under pressure amid rising worries about lockdowns in Shanghai. US stock index futures are underperforming in early pre-market deals amid escalating odds of another 75-basis point interest rate hike by the Federal Reserve this month.
As broad USD demand persists, EURUSD holds just above the 1.000 mark that capped further losses on Friday. The subsequent recovery was short-lived to attract renewed selling pressure on Monday, with the shared currency shedding 0.5% on the day.
Should the sell-off continue in the short term, the pair may threaten the 1.000 figure again, with European gas crisis adding to a downbeat tone surrounding the common currency. On the upside, a decisive bounce above 1.0200 would pave the way to a more pronounced recovery amid oversold conditions. The nearest bullish target now arrives at 1.0180, but technical indicators maintain their firmly bearish slopes within extreme levels for the time being, suggesting the path of least resistance remains to the downside.
The buck, in turn, could challenge the 108.00 next barrier if the mentioned peaks give up this week. On the economic front, the US inflation and retail sales data could affect market expectations and lift the dollar further should the figures confirm the unabating inflation pressure in the United States.