The greenback slipped as Powell have cooled down speculative expectations
The greenback rallied in a knee-jerk reaction to the Fed decision on Wednesday. However, the US currency reversed south then and finished the day lower versus most of its counterparts as Powell have cooled down speculative expectations by saying that the central bank would not hike rates before an end to the tapering. Against this backdrop, EURUSD bounced back above the 1.1300 figure and extended gains to the 1.1320 area during the European hours on Thursday. Despite the recent recovery, the upside potential surrounding the European currency remains limited for the time being. Furthermore, the selling pressure may reemerge if the ECB delivers a dovish decision later today. As such, the 1.1200 figure remains in focus as long as the pair stays below the 1.1350 region that capped gains earlier this month.
The cable has been trending higher for the third day in a row on Thursday. The pair advanced to the 1.3300 figure in nearly two weeks and was last seen clinging to the upper end of the extended trading range. However, the pound is yet to confirm recovery above the 20-DMA that lies just below the mentioned level. On the four-hour charts, the RSI is pointing north but is yet to enter the overbought territory, suggesting there is some room for further gains in the near term. If the upside pressure persists, GBPUSD could challenge the 1.3320 region later in the day, but the upside potential looks limited anyway. In a wider picture, the pair is now flirting with the 100-week SMA that could cap gains and trigger a retreat ahead of the weekend.
USDJPY has been retaining a bullish tone since the start of the week. The pair exceeded the 20-DMA on Wednesday for the first time since the plunge witnessed on November 26. The dollar climbed to December highs around 114.25 before retreating marginally during the European hours. Now, USDJPY needs to hold above the 114.00 level in order to preserve gains and extend the ascent. In the case of profit-taking, the immediate support could be expected at 113.80 where the mentioned 20-DMA arrives. As long as the prices stay above this moving average, downside risks are limited. On the hourly charts, the dollar is holding marginally above the 20-SMA, adding to a more upbeat technical picture in the short term.
Gold prices turned positive after a brief dip to two-month lows around $1,753. As the bullion managed to hold above the $1,750 important support, the recovery has brought the yellow metal back to the $1,785 area. Still, the bullish potential remains capped by the key moving averages that stand on the way towards the $1,800 psychological level. As such, the bullish momentum in gold is still limited, with the dollar staying within a broader bullish trend despite the local retreat amid the buy the rumor and sell the fact activity following the Fed decision. Now, the XAUUSD pair needs to make a decisive break above the $1,785-$1,795 zone in order to regain the $1,800 mentioned barrier. On the downside, the $1,750 critical support remains in focus as long as the prices stay below the key moving averages.
The Kiwi briefly plunged to more than one-year lows around the 0.6700 figure on Wednesday before rebounding quickly. The ascent has accelerated today, pushing the pair above the 0.6800 figure. The prices extended gains to the 0.6813 level, followed by the 20-DMA, currently at 0.6820. This moving average that represents the immediate barrier, could deter buyers and trigger a downside correction if US dollar demand reemerges anytime soon. In this scenario, the nearest support could be expected at 0.6785, followed by the 0.6770 area. On the weekly charts, NZDUSD has turned positive after the latest rally and now needs to hold above the 0.6800 handle in order to stay in the green.