The upside potential in the EURUSD pair is limited after the recent rally
As dollar demand picked up during the European hours, the euro slipped from intraday highs registered above 1.18 earlier in the day. The pair corrected lower to the 1.1750 area, flirting with the 20-DMA that could turn back into resistance on a daily closing basis. If so, the short-term technical picture will deteriorate further within a downside correction from early-September highs registered in the 1.1920 area at the start of the week. The fact that the common currency failed to preserve its bullish momentum above the 1.18 handle suggests that the upside potential in the pair is limited after the recent rally, and the path of least resistance is to the downside at least in the short term. In part, the euro came under additional downside pressure after the ECB’s Knot said that the central bank was not excluding any measures ahead of the December decision. In other words, the official hinted at additional stimulus measures which is a dovish signal for the European currency. If the selling pressure persists in the near term, EURUSD could target the 1.1720 area next. On the upside, the immediate resistance now arrives at 1.1800.
The cable peaked at fresh early-September highs just above the 1.33 handle earlier in the day but failed to extend the ascent amid a broad-based dollar recovery. The subsequent profit-taking took GBPUSD to 1.3215, still well above yesterday’s lows registered in the 1.3155 region. Despite the downside correction, the pound remains within a short-term bullish trend and could resume the upside movement after some hesitation. Furthermore, the pair remains above the key moving averages while the daily RSI looks directionless in the neutral territory, suggesting bearish risks are limited at the moment. The technical picture on the weekly charts looks constructive, with the prices being well above the ascending 20-SMA, at 1.2956 today.
USDJPY turned marginally higher on the day after a bounce from the 105.00 figure that is standing on the way towards the significant 20-DMA. This moving average (today at 104.75) acted as support during a modest bearish correction witnessed on Tuesday. Meanwhile, long lower wicks in the daily timeframes imply that the downside potential surrounding the greenback is limited at the moment. On the upside, the pair needs to regain the 100-DMA in order to confirm a more upbeat medium-term technical picture. This moving average has been representing a strong resistance level since June, so it will likely be difficult for the dollar to challenge this barrier in the short term.
Gold prices are slightly lower on the day on Wednesday as the dollar is back on the offensive. The precious metal was rejected from the $1,890 region yesterday and came under some selling pressure again. Furthermore, the retreat could accelerate further in the days to come after a strong one-day sell-off seen at the start of the week. However, in a wider picture, the bullion could attract demand at lower levels and jump to fresh all-time highs in the longer run. As of writing, the yellow metal was changing hands around $1,1870, just above the intraday lows. If the pressure intensifies any time soon, XAUUSD could retarget the $1,850 key support zone.
USDCAD extends its cautious recovery from more than two-year lows registered in the 1.2930 area on Monday. The pair climbed to the 1.3070 region in recent trading but is yet to go through a long way up in order to erase recent losses. Furthermore, the prices stay well below the key descending moving averages that now act as resistance levels. On the positive side, the daily RSI has turned slightly higher but the upside bias is too modest to expect a more sustainable and robust recovery. The immediate resistance now arrives at 1.3100. Once above this figure, the technical picture will improve marginally. On the four-hour charts, USDCAD managed to regain the 20-SMA, targeting the mentioned barrier.