U.S. Dollar (DXY) Pulls Back Amid Profit-Taking

U.S. dollar found itself under pressure as traders rushed to take some profits off the table.
EUR/USD tried to break out of the recent trading range.
GBP/USD faced strong resistance near 1.1650.

U.S. Dollar Retreats Ahead Of The Weekend

U.S. Dollar Index pulled back towards the 109 level as traders continued to take profits after the recent rally.

While yesterday’s Powell’s comments were hawkish, they were not hawkish enough to push the American currency towards new highs.

Today, the U.S. released Wholesale Inventories report for July. The report indicated that Wholesale Inventories increased by 0.6% month-over-month, compared to analyst consensus of 0.8%. Most likely, the report will have no material impact on currency dynamics as traders stay focused on the Fed.

EUR/USD Tested Resistance At The 50 EMA

EUR/USD settled above 1.0050 and made an attempt to settle above 1.0100. Traders focused on ECB’s plans to raise rates in the upcoming meetings.

Currently, EUR/USD is trying to stay above 1.0050. In case this attempt is successful, EUR/USD will move towards the next resistance level, which is located at 1.0090. A move above this level will push EUR/USD towards the recent highs at the 50 EMA at 1.0115.

On the support side, a move below 1.0050 will open the way to the test of the next support level at the 20 EMA at 1.0010. If EUR/USD declines below the 20 EMA, it will head towards the support at 0.9990. A successful test of this level will push EUR/USD towards the next support at 0.9950.

GBP/USD Tested Resistance At 1.1650

GBP/USD managed to gain strong upside momentum and made an attempt to settle above 1.1650 before pulling back below the 1.1600 level.

Profit-taking and rising appetite for risk were the key drivers for the move. GBP/USD is trading at levels that were last seen back in 1985, so the pound may need additional negative catalysts to break below the recent lows.

AUD/USD Rallies As Commodity Markets Rebound

The strong rebound in commodity markets provided significant support to commodity-related currencies. AUD/USD gained strong upside momentum and moved towards the 0.6850 level, while NZD/USD climbed back above 0.6100.

Meanwhile, USD/CAD traders had a chance to take a look at the latest job market reports from Canada. Employment Change report indicated that Canada’s economy lost 39,700 jobs in August, while analysts expected that it would add 15,000 jobs. Unemployment Rate increased from 4.9% in July to 5.4% in August. The reports provided some support to USD/CAD, but it remained under pressure due to the strong rebound in commodity markets.

USD/JPY Pulls Back As Traders Rush To Take Profits After The Strong Rally

USD/JPY has found itself under strong pressure after the recent rally. USD/JPY tested the 141.50 level before rebounding towards 142.50.

USD/JPY was clearly overbought, so the current pullback should not be a major surprise for traders. It remains to be seen whether USD/JPY will manage to get below the recent lows at 141.50 as the BoJ remains extremely dovish.

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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