It looks like the common currency could regain the upside momentum after some hesitation around 1.2050
EURUSD rallied strongly on Tuesday and extended gains to April 2018 highs in the 1.2087 area earlier today. However, as the pair has neared the 1.21000 barrier, traders proceeded to profit-taking during the European hours, pushing the euro marginally lower on the day. The retreat was due to both overbought conditions and some recovery in dollar demand after a steep sell-off. However, as the current bearish correction is modest, it looks like the common currency could regain the upside momentum after some hesitation around 1.2050. If this level gives up, a deeper correction could be expected. In this scenario, the prices could threaten the 1.2000 figure that represents the immediate significant support.
GBPUSD was rejected from September highs in the 1.3440 area and erased yesterday’s gains as a result. As this level capped gains twice already, it could serve as a double top, suggesting further gains will likely be limited in the short term. On the positive side, the cable stays above the 1.3300 figure as well as the ascending 20-DMA (today at 1.3266), which implies that the pair could refrain from a deeper correction for now. Meanwhile, the daily RSI has reversed lower in the neutral territory, which could be a sign of the pound’s readiness to challenge the 1.3340 local support. On the four-hour timeframes, the prices have dipped below the 20-DMA in recent trading while the RSI looks directionless in the neutral territory.
USDJPY bounced from the 104.20 area earlier in the day and rallied to 104.70 for the first time in over a week. In the process, the pair has exceeded the 20-DMA but is yet to reclaim is as support on a daily closing basis as the current recovery in dollar demand looks unsustainable. Still, the rebound above the 104.50 region triggered some improvement in the short-term technical picture. The question is if the pair will be able to hold onto gains. If the upside pressure intensifies any time soon, USDJPY could target 104.90 next. Still, a recovery above 105.00 looks unlikely at this stage. On the downside, the immediate support is now represented by the mentioned moving average, today at 104.36.
The cross jumped to nearly three-month highs on Wednesday, extending gains following a strong rally witnessed yesterday amid a broad-based ascent in the common currency. As such, the pair exceeded the 126.00 figure and refreshed tops in the 126.30 zone, a break above which would pave the way towards 126.50, followed by 126.80 and 127.00. However, as the daily RSI is about to enter the overbought territory for the first time since August, it looks like further gains could be limited. As of writing, the common currency was changing hands around 126.20 while the 126.00 figure now represents the immediate support. A daily close above this level would be a confirmation of the latest breakout.
USDCAD briefly dipped to more than two-year lows in the 1.2915 area that capped losses and triggered a mild pullback during the European hours. The pair climbed to intraday highs in the 1.2950 area, a break above which could pave the way towards 1.2980. However, it looks like the recovery potential in the pair is limited at this stage, with downside risks persisting as long as the dollar stays below the descending 20-DMA that arrives at 1.3040 today. In the short-term, the pair needs to regain the 1.3000 figure that acts as the key hurdle for bulls in the immediate term. Otherwise, another sell-off could send USDCAD to fresh long-term lows below 1.2900.