The greenback could stage a rally across the market if the US central bank delivers a hawkish message
The dollar looks relatively steady as the Fed’s decision looms. In recent trading, the greenback came under some selling pressure but stayed not far from one-year highs and could stage a rally across the market if the US central bank delivers a hawkish message later in the day. EURUSD bounced slightly from the 1.1250 support zone but still remains below both the 20-DMA and the 1.1300 figure during the European hours. Should the dollar jump, the common currency may retreat to fresh mid-2020 lows below 1.1200. The pair was last seen changing hands around 1.1275, up 0.16% on the day. On the four-hour charts, the euro keeps trading below the key simple moving averages while the RSI looks directionless, suggesting the recovery potential is still too weak to bet on a more robust bounce in the near term.
The cable has been retaining a bullish bias for the second day in a row on Wednesday, targeting a slightly descending 20-DMA, currently at 1.3300. However, it looks like the pair would struggle to regain this hurdle anytime soon and could see a renewed selling pressure instead as dollar bulls eagerly awaiting the outcome of the Fed meeting. In this scenario, GBPUSD would dip back below 1.3225, and should the 1.3190 zone give up, fresh 2021 lows would come into the market focus. On the weekly timeframes, the pound keeps struggling below the 100-week SMA, adding to a more downbeat technical picture. The daily RSI has reversed north in neutral territory, but the recovery momentum looks too fragile at this point.
USDJPY keeps trending higher since the start of the week. Still, the dollar lacks the bullish impetus to make a decisive break above the 20-DMA that stands on the way towards the 114.00 figure. On the downside, the immediate support is represented by the 113.40 area, followed by the 113.20 zone that has been capping the downside pressure for over a week already. So, should the selling pressure reemerge in case of resurgent safe-haven demand for the Japanese yen, this area will likely act as strong support once again. If the greenback managed to overcome the mentioned moving average, the pair would target the 114.30 zone once above 114.00. On the hourly timeframes, USDJPY was last seen flirting with the ascending 20-SMA, with the RSI looking directionless, suggesting the upside potential is limited for the time being.
Gold prices fell on Tuesday, staying under the selling pressure today. The XAUUSD pair derives support from the $1,766 area to bounce marginally in recent trading. The precious metal was last changing hands around $1,770, nearly unchanged on the day. However, bearish risks continue to persist as long as the prices stay below the $1,800 psychological level. On the way to this figure, there are several barriers represented by the key moving averages. So the bullion would need a solid bullish catalyst to make a decisive break above these hurdles. On the downside, should the mentioned lows give up anytime soon, the $1,760 area will come back into the market focus for the first time since early December when the prices staged a strong bounce from this support zone. However, this time, the $1,760 level could give up if the dollar rallies aggressively.
USDCAD has been rallying for the sixth day in a row on Wednesday. The pair climbed to nearly three-month highs around 1.2870 and was last seen changing hands around the upper end of the extended range. Now, the market focus shifts to the 1.2900 figure last seen in mid-August. However, it looks like the dollar could stay below this hurdle if the pair lacks the bullish momentum to extend the ascend and attracts profit-taking instead. Of note, the daily RSI is pointing north nut is about to enter the overbought territory, suggesting USDCAD could proceed to a downside correction following a bull run from the 1.2600 figure. On the downside, the immediate support is now expected at 1.2845, followed by the 1.2800 level.