EUR/USD, GBP/USD, USD/CAD, USD/JPY – U.S. Dollar Is Losing Ground Ahead Of Tomorrow’s Inflation Reports

Key Insights

• EUR/USD pulled back from recent highs as traders reacted to the disappointing ZEW Economic Sentiment Index report from Germany. 
• GBP/USD tested new highs as traders bet that BoE will stay hawkish. 
• USD/JPY remained under pressure as the strong pullback continued. 

U.S. Dollar

U.S. Dollar Index is losing ground as traders react to IBD/TIPP Economic Optimism Index report and prepare for tomorrow’s inflation reports. Inflation Rate is expected to decline from 4% in June to 3.2% in July, while Core Inflation Rate is projected to decrease from 5.3% to 5.0%.

U.S. Dollar Index settled below the 102 level and continues to move lower. RSI is close to the oversold territory, but there is enough room to gain additional downside momentum.

EUR/USD

EUR/USD is mostly flat in today’s trading session. Germany’s ZEW Economic Sentiment Index declined from -8.5 in June to -14.7 in July, which served as a bearish catalyst for euro.

From the technical point of view, EUR/USD is moving towards the resistance at 1.1070 – 1.1095. RSI has recently moved away from the overbought territory, which is a welcome development for the bulls.

GBP/USD

GBP/USD tests new highs as traders bet that BoE will stay hawkish despite rising Unemployment Rate. Today’s report showed that UK Unemployment Rate increased from 3.8% in April to 4% in May.

Taking a look at the daily chart, the nearest significant resistance level for GBP/USD is located in the 1.2970 – 1.3000 range, so GBP/USD has plenty of room to gain additional upside momentum.

USD/CAD

USD/CAD is losing ground as oil markets test new highs. Interestingly, other commodity-related currencies are moving lower in today’s trading session.

A move below the support area in the 1.3240 – 1.3265 range will open the way to the test of the next support, which is located in the 1.3180 – 1.3210 area.

USD/JPY

USD/JPY remains under pressure as traders bet that Fed will not be able to raise rates after the last rate hike at the upcoming meeting in July.

Currently, USD/JPY is testing the support at 140.45 – 140.80. In case this test is successful, USD/JPY will head towards the support in the 138.50 – 138.80 range.

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