GBP/USD Settled Above The Key 1.2000 Level

Key Insights

• Better-than-expected PMI reports provided support to GBP/USD and EUR/USD. 
• The disappointing PMI data put pressure on the American currency. 
• Canadian dollar found itself under pressure amid a strong sell-off in the oil markets. 

U.S. Dollar Retreats After PMI Reports

The U.S. Dollar Index pulled back towards the 106.50 level as traders bet that FOMC Minutes, which will be released today, would show that some Fed members are worried about the negative impact of aggressive rate hikes.

The FedWatch Tool indicates that there is a 71.1% probability of a 50 bps rate hike at the next Fed meeting in December. Traders expect that it will be followed by another 50 bps rate hike in February, and the target rate would reach the 475 bps – 500 bps range.

Any material change in the interest rate expectations will have a significant impact on the U.S. dollar. If FOMC Minutes are somewhat dovish, the American currency will find itself under more pressure.

The recent PMI data has put additional pressure on the U.S. dollar. Manufacturing PMI declined from 50.4 in October to 47.6 in November, while Services PMI decreased from 47.8 to 46.1. Consumer Sentiment decreased from 59.9 in October to 56.8 in November. The weak PMI reports may force the Fed to be less hawkish at the next meeting.

EUR/USD Tests Resistance At 1.0350

EUR/USD gained upside momentum after the release of the Euro Area flash PMI data. Euro Area Manufacturing PMI improved from 46.4 in October to 47.3 in November, while analysts expected that it would decline to 46. Euro Area Services PMI remained unchanged at 48.6, compared to analyst consensus of 48.

Currently, EUR/USD is trying to settle above the 1.0350 level. In case this attempt is successful, EUR/USD will move towards the 1.0400 level.

GBP/USD Rallied Above The 1.2000 Level

GBP/USD enjoyed strong support after the release of better-than expected PMI reports. Manufacturing PMI remained unchanged at 46.2 in November, compared to analyst consensus of 45.8. Services PMI was also unchanged at 48.8, while analysts expected that it would decrease to 48.

Currently, GBP/USD is trying to settle above the 1.2000 level. In case this attempt is successful, it will move towards the next resistance level at 1.2050. A successful test of the resistance at 1.2050 will push GBP/USD towards the resistance at 1.2080.

On the support side, a move below 1.2000 will push GBP/USD towards the support level at 1.1950. In case GBP/USD settles back below this level, it will head towards the next support level at 1.1900.

USD/CAD Gains Ground Amid A Strong Sell-Off In The Oil Markets

USD/CAD made an attempt to settle above the 50 EMA near 1.3440 as WTI oil declined towards the $78 level.

Other commodity-related currencies managed to gain upside momentum in today’s trading session. AUD/USD moved towards the 0.6700 level, while NZD/USD settled above 0.6200.

USD/JPY Declined Towards The Key 140 Level

USD/JPY pulled back towards the 140 level as traders focused on the general weakness of the U.S. dollar. At this point, it looks that USD/JPY may be extremely sensitive to FOMC Minutes.

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