EUR/USD, GBP/USD, AUD/USD, USD/JPY – U.S. Dollar Tests Multi-Week Highs

Key Insights

• The American currency stays strong at the start of the week. 
• EUR/USD tested new lows after the release of a disappointing Euro Area Retail Sales report. 
• USD/JPY is trying to settle above the 50 EMA as traders bet on a more hawkish Fed. 

U.S. Dollar

U.S. dollar is moving higher as Treasury yields rise. Traders continue to bet on a more hawkish Fed, which is bullish for the American currency.

The recent job market reports have increased chances that Fed would push rates above the 5.00% level in 2023. Also, it looks that a short squeeze may be an important catalyst behind the rally.

EUR/USD

EUR/USD remains under pressure at the start of the week. Today, EUR/USD traders focused on the Euro Area Retail Sales report. The report indicated that Euro Area Retail Sales declined by 2.7% month-over-month in December, compared to analyst consensus of -2.5%.

The disappointing report served as an additional bearish catalyst for the euro, although the expectations of a more hawkish Fed were the main driver behind today’s move.

GBP/USD

GBP/USD is currently trying to get to the test of the 1.2000 level. RSI is in the moderate territory, so there is enough room to gain additional downside momentum in case the right catalysts emerge.

If GBP/USD manages to settle below 1.2000, it will head towards the next support level, which is located at 1.1950.

AUD/USD

AUD/USD settled below the 0.6900 level as traders focused on the general strength of the U.S. dollar.

Other commodity-related currencies have also found themselves under pressure in today’s trading session. NZD/USD declined below the 0.6300 level, while USD/CAD tested the 1.3450 level.

USD/JPY

USD/JPY continues to rebound at a robust pace. Currently, USD/JPY is trying to settle above the 50 EMA at 132.90. A more hawkish Fed is especially bullish for USD/JPY as the BoJ sticks to its ultra-dovish policy.

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