The Fed’s governor tone on the economy and monetary policy could affect short-term dynamics in USD pairs
EURUSD is consolidating yesterday’s gains on Tuesday, trading around the 1.18 figure and marginally above the 20-DMA. Further bullishness is in part capped by the recent statement from ECB’s President, Christine Lagarde, who expressed concerns about the economic recovery. Following the comment, the euro eased towards a daily low of 1.1765 where the mentioned moving average acted as support. As the four-hour chart shows, the price is struggling with a mildly bearish 200-SMA, with the RSI approaching overbought readings, suggesting further gains could be limited in the short term. Once above the 1.1810 resistance, the pair could retarget the 1.1880 next hurdle.
GBP/USD saw an intraday turnaround from the key 1.3000 psychological mark on Tuesday and turned marginally lower on the day as the persisting uncertainty surrounding Brexit- took its toll on the British pound. On the other hand, losses were limited due to a softer tone surrounding the greenback ahead of Powell’s speech due later today. The Fed’s governor tone on the economy and monetary policy could affect short-term dynamics in USD pairs. As a result of rejection from local highs, the cable broke down of its daily consolidative trading range and refreshed daily lows around 1.2920. As of writing, the pair was changing hands around 1.2960, just a tad lower on the day.
USDJPY failed to extend its gains beyond 105.80, retreating from the resistance area that capped yesterday’s bullish attempts as well. As of writing, the pair was trading around 150.60, technically neutral, with the bullish scope being limited amid the general weakness in dollar demand. Should the prices resume the ascent and break above the mentioned resistance, the breakout could pave the way to a retest of the 106.30 zone where another barrier for USD bulls arrives. On the four-hour timeframes, the pair is flirting with the 200-SMA that now caps the way toward 105.80. On the flip side, USDJPY needs to hold above the 20-DMA around 105.40 to avoid a deeper retreat in the short term.
As fresh selling around the British pound reemerged, the EUR/GBP cross came above the 0.91 round-figure mark. Today is the second consecutive day of a positive move that is also supported by some pickup in demand for the common currency. However, further bullish attempts are likely to confront the immediate resistance represented by the 20-DMA, at 0.9140 today. That said, a convincing breakthrough will be seen as a fresh trigger for euro bulls that could take the pair to 0.9190. On the downside, the cross remains supported by the 100-DMA that arrives at 0.9030. Technical indicators on the daily chart maintain their bullish bias and support prospects for an eventual break above the mentioned immediate resistance
USDCAD dipped to nearly two-week lows around 1.3240 in recent trading but still fluctuating in a narrow trading range on Tuesday, with bullish attempts being capped by the 20-DMA that turned back into support for the first time in nearly a month. It is a bearish sign along with the descending 100-DMA while the directionless daily RSI in the neutral territory suggests the dollar could spend some time in a consolidative mode before deciding on a further direction. In a wider picture, downside risks are limited as long as the prices stay above the 1.3130 area where a strong support zone arrives. Once below this handle, bearish pressure could intensify and drive the pair back to early-2020 lows last seen in late-August around 1.30.