U.S. Dollar (DXY) Is Under Strong Pressure

U.S. Dollar Index pulled back below the 112.50 level as traders reacted to the news from the UK. The new UK finance minister Jeremy Hunt announced that the previous economic plan, which included tax cuts, would be scrapped.

UK government bonds rallied, providing significant support to other riskier assets. As a result, the U.S. dollar found itself under material pressure.

Today, traders also had a chance to take a look at the NY Empire State Manufacturing Index report for October. The report indicated that NY Empire State Manufacturing Index declined from -1.5 in September to -9.1 in October, compared to analyst consensus of -4.

EUR/USD Rebounds Towards 0.9800

EUR/USD is moving towards the 0.9800 level amid increasing demand for riskier assets.

EU government bond yields decreased as bond markets calmed down, which was bullish for the euro.

Tomorrow, traders will focus on the Euro Area ZEW Economic Sentiment Index report, which is expected to show that Economic Sentiment declined from -60.7 in September to -62.3 in October. In case the report misses expectations, the European currency may find itself under pressure.

GBP/USD Rallies Amid A U-Turn In Economic Policy

GBP/USD moved above the 1.1350 level as traders reacted to the above-mentioned changes in the UK economic policy.

Currently, GBP/USD is trying to settle above the resistance at 1.1365. In case this attempt is successful, GBP/USD will move towards the next material resistance level, which is located at the 50 EMA at 1.1450. A move above this level will open the way to the test of the resistance at 1.1500.

On the support side, GBP/USD needs to stay below 1.1365 to have a chance to gain downside momentum in the near term. The next support level for GBP/USD is located at 1.1275. A move below this level will push GBP/USD towards the support at the 20 EMA at 1.1225.

AUD/USD Rebounds After Sell-Off

AUD/USD gained strong upside momentum and moved towards the 0.6300 level as demand for riskier currencies increased. NZD/USD has also enjoyed strong support and moved closer to 0.5650.

Meanwhile, USD/CAD settled below the 1.3750 level. The rebound in commodity markets served as an additional positive catalyst for commodity-related currencies.

USD/JPY Remains Under Pressure As The BoJ Does Not Intervene

USD/JPY settled above 148.50 and is trying to get to the test of the 149 level as the BoJ does not intervene to protect the yen.

The Japanese yen has lost its safe-haven status due to the ultra-dovish policy of the BoJ. Potential interventions could have provided some support to the Japanese currency, but the BoJ is not ready for big moves. As a result of BoJ’s dovish policy, USD/JPY may soon test the psychologically important 150 level.

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

About the Author

Vladimir Zernovauthor

Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.

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