Should the Fed express a more dovish tone, the shared currency may regain 0.0100 later in the day
The USD index retains a mild bearish tone on Wednesday as traders turned cautious ahead of the Federal Reserve monetary policy decision. In the previous session, the US dollar failed to challenge the 112.00 figure on Tuesday to come under some selling pressure after four bullish sessions in a row. Should the Fed deliver a less hawkish message, the greenback may come under more intense downside pressure in a knee-jerk reaction to the meeting outcome. The DXY could get back below 111.00, with the next support coming at 110.70, followed by the 110.20 zone. As such, the euro remains below parity, trading directionless these days. EURUSD still stays above the 20-DMA while also holding below parity. The shared currency was last seen changing hands around 0.9883, adding 0.1% on the day. Should the Fed express a more dovish tone, the shared currency may regain 0.0100 later in the day.
The pound has been trading in a mixed-to-bearish since last week’s rejection from above 1.1600. The pair has settled around 1.1500 on Wednesday, lacking the upside momentum despite positive risk sentiment in the global financial markets. The cable struggles for direction today, staying stuck between the 100- and 20-DMAs. The cable holds well above the 20-DMA, today at 1.1314. The pair was last seen changing hands around 1.1504, up less than 0.2% on the day. Now, GBPUSD needs to regain the 1.1600 zone on a daily closing basis in order to stay afloat in the immediate term. In this scenario, the 100-DMA, today at 1.1715, will come into the market focus. However, the cable could lack the momentum to challenge this moving average in the near term if the dollar resumes the ascent following the Fed’s decision.
The USDJPY pair has been losing ground for the second session in a row on Wednesday. The dollar is flirting with the ascending 20-DMA after a failure to regain the 149.00 level at the start of the week. Should the pair finish below the moving average, today at 147.60, the near-term technical picture will deteriorate somehow, but a broader uptrend is likely to stay intact while above the 125.00 zone last seen in April. As a reminder, USDJPY notched fresh multi-year highs around 152.00 in October to finish the third consecutive month with solid gains. In the immediate term, the greenback needs to stay around 20-DMA in order to avoid a deeper retreat. Otherwise, the pair is likely to suffer fresh losses, with the 145.00 support zone coming into the market focus at this stage. The USD was last seen trading around 147.40, shedding 0.60% on the day.
Gold failed to make a decisive break above the 20-DMA last week. However, the precious metal resumed the ascent on Tuesday, retaining a modest bullish tone today. The XAUUSD pair is back targeting the mentioned moving average (today at $1,657) while adding nearly 0.25% on the day. The bullion was last seen changing hands around $1,650 after a bounce from the $1,630 support zone at the start of the week. The XAUUSD pair is likely to stay below the mentioned 20-DMA in the near term, with bearish risks persisting despite the ongoing recovery. On the downside, the nearest significant support now arrives at $1,640 zone. A failure to hold above this region would pave the way towards the $1,600 mark last seen in April 2020. On the upside, a decisive bounce above the 20-DMA would pave the way towards the $1,675 intermediate barrier on the way towards the $1,700 mark.