EUR/USD, GBP/USD, USD/CAD, USD/JPY – U.S. Dollar Pulls Back After Inflation Reports

Key Insights

• EUR/USD tested new highs at 1.1000.
• USD/CAD pulled back after BoC Interest Rate Decision. 
• USD/JPY failed to settle above the important resistance at 133.75.

U.S. Dollar

U.S. Dollar Index made an attempt to settle below the 101.50 level after the release of U.S. inflation data. FedWatch Tool shows that there is a 75.8% probability of a 25 bps rate hike at the next Fed meeting in May. However, this rate hike has been already priced in by the market, and traders have started to prepare for rate cuts in the second half of the year.

If the U.S. Dollar Index settles below the 101.50 level, it will move towards the support at 101.05. A successful test of the support at 101.05 will open the way to the test of the support level at 100.80.

R1:102.00 – R2:102.50 – R3:102.80

S1:101.50 – S2:101.05 – S3:100.80

EUR/USD

EUR/USD tested new highs as traders reacted to U.S. inflation data. The market expects that ECB will be forced to keep the interest rate at high levels while the Fed will start cutting rates in the second half of 2023.

The nearest significant resistance level for EUR/USD is located at 1.1000. A move above this level will push EUR/USD towards the next resistance at 1.1030.

R1:1.1000 – R2:1.1030 – R3:1.1050

S1:1.0970 – S2:1.0940 – S3:1.0910

GBP/USD

GBP/USD continued to rebound as traders focused on the general weakness of the U.S. dollar. Treasury yields pulled back after the release of U.S. inflation data, which was bullish for GBP/USD.

If GBP/USD climbs above the resistance at 1.2460, it will head towards the next resistance level at 1.2500. On the support side, a move below 1.2430 will open the way to the test of the support at 1.2390.

R1:1.2460 – R2:1.2500 – R3:1.2525

S1:1.2430 – S21.2390 – S3:1.2360

USD/CAD

USD/CAD is testing the support at 1.3450 after BoC Interest Rate Decision. The bank left the interest rate unchanged at 4.5%, in line with the analyst consensus.

If USD/CAD settles below 1.3450, it will move towards the support at 1.3410. A successful test of the support at 1.3410 will push USD/CAD towards the next support level at 1.3380.

R1:1.3480 – R2:1.3520 – R3:1.3550

S1:1.3450 – S2:1.3410 – S3:1.3380

USD/JPY

USD/JPY has recently made another attempt to settle above the resistance at 133.75 but failed to develop sufficient upside momentum as Treasury yields moved lower.

In case USD/JPY manages to settle below the support at 133.00, it will move towards the next support level at 132.20. A successful test of this level will push USD/JPY towards the support at 131.85.

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