Risk aversion intensified as well as the selling pressure surrounding the dollar after gloomy predictions from the Federal Reserve during yesterday’s meeting. The central bank expects the US economy to contract 6.5% this year and the unemployment rate to stay elevated for a few years. At the same time, the Fed officials reiterated their readiness to support the struggling economy but it did little to help stocks that suffered losses during the session except for Nasdaq that gained nearly 1% overnight.
The dollar came under pressure as well. The USD index retreated substantially and turned mixed on Thursday, trying to regain recent losses. Still, the euro managed to stay above 1.13 and climbed to the 1.14 handle earlier in the day. At the time of writing, EURUSD is directionless around the opening levels. Later in the day, the US jobless claims data may set the short-term tone for the pair.
USDJPY extends the decline for the fourth day in a row on Thursday. The pair remains under pressure amid the prevailing risk-off tone in the global financial markets. On Monday, the prices were rejected from the 109.70 level and have been losing ground since then. In recent trading, the pair dipped to nearly one-month lows around 106.80 and bounced to the 107.00 level which is now the key figure for further short-term direction in the greenback.
Similarly, USDCHF remains in the red since the start of the week and plunged to fresh mid-March lows around 0.94 in recent trading. If the prices fail to hold above this support zone, further losses could lie ahead, especially as risk aversion continues to prevail in the markets.
Meanwhile, gold prices are marginally lower today, holding above $1,725. The precious metal registered intraday highs around $1,739 earlier in the day, and it looks like the bullion may resume the ascent if the current levels withstand a local selling pressure. On the upside, a decisive break above the $1,740 area will bring the $1,755 handle back into market focus. In a wider picture, as long as the yellow metal stays above the 100-DMA around $1,648, downside risks are limited.
