EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – U.S. Dollar Retreats As Consumer Inflation Expectations Decline

Key Insights

• EUR/USD settled above 1.0950 after Euro Area Economic Sentiment exceeded analyst expectations. 
• USD/CAD was mostly flat despite the sell-off in the oil markets. 
• USD/JPY moved lower as traders focused on falling Treasury yields.

U.S. Dollar

U.S. Dollar Index is losing ground as traders react to Consumer Inflation Expectations report, which showed that inflation expectations declined from 3.4% in November to 3.0% in December.

A successful test of the support at 101.75 – 102.00 will open the way to the test of the next support level, which is located in the 100.50 – 100.80 range.

EUR/USD

EUR/USD gains ground as traders focus on the better-than-expected Euro Area Economic Sentiment report, which showed that Economic Sentiment imrpoved from 94.0 in November to 96.4 in December.

If EUR/USD climbs above the 50 MA at 1.0999, it will head towards the resistance at 1.1015 – 1.1035.

GBP/USD

GBP/USD is moving higher as traders focus on the general weakness of the American currency.

RSI remains in the moderate territory, so there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

USD/CAD

USD/CAD is mostly flat despite the strong sell-off in the oil markets, which was triggered by Saudi Arabia’s decision to cut prices for consumers.

Currently, USD/CAD remains stuck below the resistance at 1.3380 – 1.3410. If USD/CAD climbs above the 1.3410 level, it will move towards the next resistance at 1.3480 – 1.3500.

USD/JPY

USD/JPY is losing ground as Treasury yields are moving lower. USD/JPY remains extremely sensitive to the dynamics of Treasury yields as the BoJ sticks to its ultra-dovish policy.

In case USD/JPY settles below the 144.00 level, it will head towards the 50 MA at 142.81.

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