USDCHF came under pressure following eight days of gains in a row
The US dollar extended the recent ascent to fresh two-decade highs around 105.65 to finish around 105.30 on Tuesday. Today, the USD index keeps retreating from peaks as traders take some profit ahead of the Fed policy decision due later in the day. Should the Fed announce a 75 bps hike, the USD index may rally towards fresh multi-year highs around 106.00, followed by a major threshold of 107.00. Still, the dollar’s knee-jerk reaction may not be positive. Now, the greenback is somehow pressured by the rallying euro, with EURUSD targeting the 1.0500 mark on the news that the ECB is holding an emergency meeting to discuss the recent sell-off in the bond market. Should the shared currency exceed this immediate barrier, further gains could lie ahead in the short term. Still, the euro remains within a broader downtrend, holding below the 20-DMA for nearly a week already. The immediate support now arrives at 1.0460, followed by the 1.0430 intermediate zone on the way towards 1.0400.
GBPUSD plunged to fresh March 2020 lows around 1.1930 on Tuesday before trimming some of the intraday losses. Today, the cable extended the rebound to the 1.2100 figure that has been capping more decisive gains at this stage. The pair regained the 1.2000 mark, but downside risks continue to persist in the near term, as the dollar’s correction looks limited ahead of the Fed decision. On the four-hour charts, the pound remains well below the key moving averages while the RSI struggles for direction, now holding in neutral territory, suggesting the pound could struggle to overcome 1.2100 on a daily closing basis. On the upside, the immediate resistance arrives at 1.2175 where the descending 20-SMA (on the four-hour charts) arrives. The longer-term outlook remains downbeat while below the 200-week SMA, today at 1.3085.
USDJPY refreshed two-decade highs around 135.60 early on Wednesday before retreating back below 135.00 as traders opted to take some profit after a strong rally. The dollar has settled around 134.40 in recent trading, deciding on the further direction as the Fed decision looms. The outcome of the meeting will set fresh tone for the pair that could rally towards fresh tops if the USD bulls cheer a rate hike, the dot plots, and updated economic projections. Otherwise, USDJPY could witness a solid correction amid overbought conditions. On the shorter-term timeframes, the prices are flirting with the key moving averages, a break below which would pave the way to the 134.00 immediate support, followed by the 133.50 zone. On the upside, a possible rally above the mentioned tops could open the road to 137.00.
USDCHF came under pressure following eight days of gains in a row. The pair peaked at the 1.0035 psychological level that capped the ascent and triggered a local retreat on Wednesday. The dollar fell back to 0.9970, still holding well above yesterday’s lows registered around 0.9870. The technical picture on the daily charts looks mixed at this stage, with the RSI pointing south in neutral territory while the pair itself is holding well above the key simple moving averages. The pair is likely hesitate for some time before deciding on the further direction that could push the prices back to last month’s highs registered around 1.0065. On the downside, the nearest significant target now arrives at 0.9930, followed by the 0.9870 mentioned zone. On the weekly timeframes, the technical picture looks positive, with USDCHF holding above the key SMAs while the RSI keeps trending higher, staying in neutral territory so far.