The cable extended losses to one-month lows just above the 1.3400 figure before bouncing slightly in recent trading
The US central bank expressed a more hawkish tone than expected as Powell said the FOMC could lift rates at every meeting starting from March to fight the elevated inflation. Furthermore, the central bank has almost confirmed balance-sheet reduction this year. The USD index jumped and extended the ascent to mid-December highs around 96.85, targeting the 97.00 figure. As such, EURUSD plunged back below the 1.1300 figure and extended losses to two-month lows below the 1.1200 figure on Thursday. The pair now looks oversold but strong bearish momentum indicates that the euro could weaken further in the short term and target the 2021 low near 1.1185. On the hourly charts, the pair is now well below the key moving averages while the RSI looks directionless in the oversold territory, suggesting there is a chance that the prices could bounce and regain the 1.1200 figure in the near term.
GBPUSD was rejected from the 100-DMA on Wednesday and finished below 1.3500. Today, the pair extended losses to one-month lows just above the 1.3400 figure before bouncing slightly in recent trading. Earlier in the week, the selling pressure surrounding the pound intensified after the prices failed to hold above the key moving averages. Now, as the daily RSI is pointing lower in the neutral territory while the dollar remains elevated across the market, it looks like GBPUSD will stay on the defensive in the near term and could challenge the 1.3400 level if the greenback attracts fresh buyers during the upcoming session. On the downside, the next support could be expected at 1.3375, followed by the 1.3345 zone. The pair was last seen changing hands around 1.3430, down 0.23% on the day. Should the cable regain the 1.3450 region in the near term, the downside pressure will ease somehow.
USDJPY rallied to last week’s highs around 115.05 on Thursday, clinging to the higher end of the extended trading range. In the process, the pair exceeded the 20-DMA, currently at 114.80, adding to a more upbeat technical picture. The dollar posts solid weekly gains so far and could see more gains should the 115.00 figure turns back into support on a daily closing basis. Despite a fairly aggressive rally these days, the daily RSI hasn’t entered the overbought territory just yet and continues to point higher, suggesting there is room for further gains in the short term. Should the greenback correct lower, the immediate support now arrives at the mentioned 20-DMA, followed by the 114.55 region. In a wider picture, the pair has room for recovery after two weeks of losses.
Gold prices plunged dramatically against the backdrop of a rally both in the greenback and US Treasury yields in the aftermath of the Fed meeting overnight. The XAUUSD pair dipped below the 20-DMA to notch local lows below $1,810. A break below the 20-DMA, currently at $1,805, would pave the way towards the $1,800 last line of defense for gold buyers that has been acting as support for more than two weeks already. Now, the yellow metal is attempting a bounce amid oversold conditions. XAUUSD was last seen flirting with the $1,815 region, targeting the mentioned 20-DMA that arrives at $1,820. However, it looks like the downside pressure could intensify again after a so-called dead cat bounce, as traders will continue to digest a hawkish message from the Federal Reserve in the near term.
USDCHF has been rallying since the start of the week. Today, the pair extended the ascent to more than two-week highs around 0.9275, with the key moving averages acting as support levels, adding to a bullish technical picture. Should the buying pressure surrounding the greenback persist in the short term, USDCHF can target mid-December highs just below the 0.9300 figure. On the downside, the nearest support now arrives in the 0.9250-0.9240 area, followed by the 100-DMA, currently at 0.9213. On the four-hour charts, the dollar looks overbought at the current levels which implies that further gains could be capped by the mentioned local highs.