The ECB left its key rates unchanged, matching the broad consensus
EURUSD
US economic data came in better than expected, lifting stocks along with the greenback. The United States’ GDP expanded at an annual rate of 33.1% in the third quarter. With the initial market reaction, the dollar edged slightly lower but stayed elevated on the day despite risk sentiment has improved somewhat following the release. Meanwhile, the ECB left its key rates unchanged, matching the broad consensus. The euro was partially pressured by the latest comments from German Finance Minister Olaf Scholz who said that the coronavirus situation in Germany is serious and will remain difficult through the four months of winter.
EURUSD stayed negative on the day after the announcement and briefly dipped below the 1.17 handle before a slight recovery. The fact that the euro derailed a significant support level may signal that further losses could lie ahead. The daily RSI continues to point downwards in the neutral territory, which implies that the pressure will likely persist in the near term. If the pair shifts into a corrective mode, the initial resistance should be expected around 1.1750, followed by the 20-DMA in the 1.1775 region. On the downside, if a break below 1.17 is confirmed, the next support should be expected 1.1660.
GBPUSD keeps losing ground, struggling to regain the 20-DMA as dollar demand persists nearly across the board. At the same time, the pair refrains from revisiting yesterday’s lows in the 1.2916 area, a break below which will pave the way towards 1.29. As long as the prices stay above this level, downside risks are limited. Also, a strong support level arrives at 1.2870 where the 100-DMA lies. The daily RSI is pointing slightly downwards but the bias is too modest to bet on more aggressive losses in the near term. On the four-hour charts, the cable was rejected from the 100-SMA earlier in the session, which marks some deterioration in the shorter-term technical picture. In the immediate term, the pound needs to hold above the 200-SMA in order to avoid fresh losses.
USDJPY
USDJPY briefly dipped to September 21st lows in the 104.00 area that once again acted as support. The pair has bounced since then and turned flat on the day. As a result, a long lower wick was created on the intraday charts, suggesting further downside potential is limited, and the prices could proceed to a bullish correction as investor sentiment has improved marginally following the upbeat economic data out of the United States. On the upside, the immediate resistance now arrives at 104.55, followed by the 104.85 intermediate hurdle, and 105.00. On the four-hour chart, bullish attempts in the USDJPY pair is now capped by the descending 20-SMA, which implies that the greenback will likely struggle to turn positive on the day in the near term.
Gold prices extended losses after some hesitation earlier in the day. Dollar stays elevated, capping upside attempts in the precious metal. The bullion now faces resistance in the form of the 200-DMA that acted as support since March, which is a strong negative signal. The yellow metal extended losses to the $1,860 area in recent trading and could threaten late-September lows below $1,850 if the pressure persists in the near term. As the daily RSI hasn’t entered the oversold territory yet, XAUUSD could suffer more losses in the near term before a reversal takes place. Furthermore, the longer-term technical picture for gold has deteriorated as well, as the important 20-weekly MA turned into resistance earlier this week.
