EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – U.S. Dollar Retreats After Inflation Report

U.S. Dollar

U.S. Dollar Index is under strong pressure as traders react to U.S. inflation data. Inflation Rate declined from 3.5% in March to 3.4% in April, in line with analyst expectations. Core Inflation Rate decreased from 3.8% to 3.6%. Traders were worried that Inflation Rate would exceed expectations. Today, traders also focused on the Retail Sales report. The report indicated that Retail Sales were unchanged in April, compared to analyst consensus of +0.4%. The weaker-than-expected report put additional pressure on the American currency.

Currently, U.S. Dollar Index is trying to settle below the 104.40 level. In case this attempt is successful, U.S. Dollar Index will head towards the next support level, which is located in the 103.75 – 103.90 range.

EUR/USD

EUR/USD tests new highs as traders focus on U.S. inflation data. Today, traders also had a chance to take a look at the second estimate of the first-quarter Euro Area GDP Growth Rate report. GDP Growth Rate of 0.3% met analyst estimates.

A successful test of the resistance at 1.0870 – 1.0885 will open the way to the test of the next resistance level at 1.0960 – 1.0980.

GBP/USD

GBP/USD has also moved higher after the release of U.S. inflation data. Treasury yields declined as bond traders bet on a less hawkish Fed. Falling Treasury yields provided additional support to GBP/USD.

A move above the resistance at 1.2670 – 1.2700 will push GBP/USD towards the next resistance level at 1.2780 – 1.2800.

USD/CAD

USD/CAD is losing ground as traders focus on U.S. dollar’s weakness and the rally in precious metals markets.

In case USD/CAD declines below the 1.3600 level, it will move towards the next support at 1.3480 – 1.3500.

USD/JPY

USD/JPY is losing ground as Treasury yields move lower. Bulls reduce their long positions after the release of U.S. inflation data.

If USD/JPY manages to settle below the nearest support at 154.50 – 155.00, it will gain additional downside momentum and move towards the next support level, which is located in the 151.50 – 152.00 range.

For a look at all of today’s economic events, check out our economic calendar.