EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – U.S. Dollar Tests New Highs As Traders Focus On Hawkish Fed

Key Insights

• U.S. Dollar Index surges amid Fed rate hike expectations, with 10-year Treasury yields nearing 4.60% and 30-year yields at 4.70%.
• EUR/USD tests new lows as Germany’s Consumer Confidence declnes. 
• Pound remains bearish post-dovish BoE, with potential for a rebound as RSI hits extreme oversold levels.

U.S. Dollar

U.S. Dollar Index tests new highs as traders stay focused on the potential rate hikes from the Fed. The yield of 10-year Treasuries moved towards the 4.60% level, while the yield of 30-year Treasuries tested the 4.70% level as bond traders prepared for a hawkish Fed.

U.S. Dollar Index is overbought. However, the current trend stays strong, so U.S. Dollar Index has a chance to test the nearest resistance in the 106.90 – 107.20 range.

EUR/USD

EUR/USD retreats as traders stay focused on the hawkish Fed. Traders believe that ECB will be more dovish due to the problems of the European economy. Today’s GfK Consumer Confidence report from Germany, which showed that Consumer Confidence declined from -25.6 in September to -26.5 in October, put additional pressure on the euro.

RSI is in the oversold territory, so the risks of a rebound are increasing. EUR/USD may get some support near the psychologically important 1.0500 level.

GBP/USD

GBP/USD remains under pressure due to the recent dovish decision of the BoE. Most likely, GBP/USD will need significant catalysts to break the current trend.

GBP/USD has recently moved below the 1.2180 level and is heading towards the support at 1.2000 – 1.2030. Traders should note that RSI is in the extremely oversold territory, so the probability of a near-term rebound is increasing day by day.

USD/CAD

USD/CAD continues its attempts to settle above the resistance at 1.3520. Oil markets test new highs, which is bullish for the Canadian dollar.

In case USD/CAD settles above the 1.3520 level, it will gain additional upside momentum and head towards the next resistance, which is located in the 1.3675 – 1.3700 range.

USD/JPY

USD/JPY moved above the 149.00 level as traders reacted to the BoJ Monetary Policy Meeting Minutes, which showed that BoJ remained committed to its ultra-dovish policy.

There are no signs of interventions from the BoJ, so USD/JPY is heading towards the next resistance in the 151.50 – 152.00 range.

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