Meanwhile, pound is still vulnerable to further losses amid the ongoing Brexit woes
The euro barely reacted to the ECB’s decision to leave its monetary policy unchanged, as expected. During the press-conference, Lagarde highlighted that there was no need to overreact to the euro’s gains but the central bank will closely monitor the FX rate. On the economy, she said that the strength of recovery remains surrounded by uncertainty, with uncertainty weighing on consumer spending and business investment so ample monetary stimulus remains necessary. On the positive side, Lagarde noted that the economic rebound was broadly in line with previous expectations, and domestic demand recorded significant recovery. Besides, the central bank revised up its 2020 GDP estimate to -8.0% versus -8.7% in June.
Meanwhile, US economic data came in mixed but painted a fairly upbeat picture in general. The producer price index arrived at +0.3% versus +0.2% m/m expected in August. On an annual basis, the index came in at -0.2%, also better than a decline by 0.3% expected and -0.4% previously. US weekly jobless claims arrived at 884,000, slightly higher than 846,000 expected.
Fairly upbeat comments from the ECB Governor coupled with mixed economic figures out of the United States sent the euro higher across the board. In a knee-jerk reaction, EURUSD jumped to the 1.1900 region but retreated soon, having trimmed intraday gains. As of writing, the common currency was changing hands around 1.1870, holding well above the 1.18 figure that turned into resistance again. A daily close above the 1.1850 zone could confirm the latest breakout. Otherwise, 1.18 will come back into market focus.
Cable remains on the defensive these days, struggling to turn the 50-daily moving average into support since yesterday’s plunge to late-July lows below 1.29. On Thursday, GBPUSD stayed under pressure but managed to trim intraday losses in recent trading as dollar demand waned further. In a wider picture, the pound is still vulnerable to further losses amid the ongoing Brexit woes. Should developments on this front improve in the days to come, the pair could stage an impressive bounce. On the upside, the immediate target comes at 1.30. Once this level turns back into support on a daily closing basis, further recovery could be expected. In the immediate term, downside risks persist despite a partial recovery from intraday lows.
USDJPY struggled to regain the upside bias, continuing to oscillate around the 20-daily moving average that now arrives at the 106.00 handle. The pair remains stuck within a familiar trading range despite the recent pickup in volatility in the global financial markets, with the daily RSI being neutral as well. On the four-hour timeframes, the greenback is holding above the 200-SMA, a break below which could bring deeper losses on the intraday basis.
Gold prices bounced from the 200-hourly moving average as dollar demand has waned in recent trading. As a result, the precious metal climbed to intraday highs around $1,958 and was changing hands around the upper end of the intraday range at the time of writing. However, the current gains are still too modest to bet on a more sustainable ascent in the near term, with the $1,900 handle remaining in market focus as long as the bullion stays below the $2,000 psychological level. In a wider picture, gold has been losing its bullish steam for over a month already, since its rejection from all-time highs in early-August.