The common currency is yet to confirm a recovery above 1.18 on a daily closing basis
EURUSD bounced strongly in recent trading and has settled above the 1.18 handle since then. The reason behind a sharp recovery was a leak from the ECB forecasts reported by Bloomberg. According to the obtained information, the central bank policy makers could express more confidence in their economic forecasts. Earlier, there were speculations that the regulator may express a dovish tone and add to the selling pressure surrounding the common currency. However, the latest bounce could attract more sellers in the short term as the overall dollar demand persists. As such, the pair is yet to confirm a recovery above 1.18 on a daily closing basis. Should the ECB strike a more optimistic tone on Thursday, EURUSD will likely stage a more impressive and sustainable rally.
Cable remains on the defensive amid a combination of a stronger dollar and Brexit-related uncertainty. The pair extended intraday losses to late-July lows around 1.2885 and bounced partially since then. As of writing, the pound was changing hands around the 50-daily moving average that was derailed for the first time in over two months. Should dollar demand persist, the pair could resume the decline and target the 200- and 100-DMAs that arrive at 1.2740 and 1.2680, respectively. If GBPUSD manages to cling to the 50-DMA and see a more robust bounce, the initial hurdle for bulls should be expected at the 1.30 psychological level.
USDJPY turned marginally higher on the day after an earlier dip to 105.80. The pair has settled above 106.00 since then but struggles to stage a more aggressive recovery as traders remain cautious despite risk sentiment has improved somewhat after the recent rout in the global financial markets. In a wider picture, the greenback continues to oscillate around the 20-daily moving average while the daily RSI is directionless in the neutral territory, suggesting the current consolidation could continue at least in the short term. On the four-hour timeframes, the dollar struggles to overcome the 20-SMA while the 100-SMA now acts as the immediate support.
The Kiwi bounced strongly in recent trading as the improving risk sentiment triggered a weaker demand for the greenback. As a result, the pair turned positive on the day after a brief dip below the 50-DMA that triggered a sharp local recovery. NZDUSD jumped above 0.6670 and could target the 0.67 handle if the upside pressure persists in the short term. However, the Kiwi could quickly lose the bullish momentum if risk sentiment turns sour again. In this scenario, the pair will likely attract sellers around the current levels and retreat to the mentioned moving average that could cap the potential downside momentum.
USDCAD was rejected from nearly one-month highs around 1.3260 earlier in the day and turned negative since then. The pair has settled in the 1.32 area ahead of the opening bell on Wall Street. Should dollar demand continue to fade in the near term, the prices may target the 1.3130 region, followed by the 1.31 support zone. However, as the daily RSI looks nearly directionless, the downside momentum looks limited at this stage. Furthermore, the greenback could regain the upside bias after the current correction if oil prices fail to stage a recovery and resume the decline which would weigh on the Canadian dollar.