U.S. Dollar (DXY) Rebounds After Yesterday’s Sell-Off

U.S. dollar moved higher after Michigan Consumer Sentiment report exceeded expectations.
GBP/USD is under pressure as Prime Minister Truss fires Finance Minister Kwarteng.
USD/JPY keeps moving higher as the BoJ does not intervene.

U.S. Consumer Sentiment Exceeds Expectations

U.S. Dollar Index tested the resistance at 113.20 after the release of the preliminary Michigan Consumer Sentiment report for October.

The report indicated that Consumer Sentiment improved from 58.6 in September to 59.8 in October, compared to analyst consensus of 59.

Today, traders also had a chance to take a look at the Retail Sales report for Septmeber. The report indicated that Retail Sales remained unchanged, compared to analyst consensus which called for growth of 0.2%.

The rapid rebound of the U.S. dollar after yesterday’s strong sell-off highlights the strong demand for safe-haven assets.

EUR/USD Pulls Back After Yesterday’s Rebound

EUR/USD failed to settle above the 20 EMA at 0.9800 and pulled back towards 0.9720 as traders took profits off the table after yesterday’s strong rebound.

Government bond yields in the European market are moving higher, which indicates that traders remain worried about a potential debt crisis in the Eurozone.

The 10-year government bonds of weaker EU members like Greece and Italy are currently yielding 4.75% – 4.80%. A move above the 5.00% level will likely trigger a sell-off in EUR/USD.

GBP/USD Falls As Truss Fires Her Finance Minister

GBP/USD is in spotlight today as UK Prime Minister Liz Truss has just fired her Finance Minister Kwasi Kwarteng. Traders decided to sell GBP/USD while they were waiting for new moves from the UK government.

Currently, GBP/USD is trying to settle below the 20 EMA at 1.1210. In case this attempt is successful, GBP/USD will move towards the next support level, which is located at 1.1135. A move below this level will push GBP/USD towards the support at 1.1085.

On the upside, GBP/USD needs to stay above the 20 EMA to have a chance to gain upside momentum in the near term. The next resistance level for GBP/USD is located at 1.1275. If GBP/USD settles above this level, it will move towards the resistance at the recent highs at 1.1365.

AUD/USD Declines As Commodity Markets Pull Back

AUD/USD moved towards the 0.6250 level as commodity markets found themselves under pressure. Meanwhile, NZD/USD is trying to settle below the 0.5600 level.

Canadian dollar is also moving lower, and USD/CAD is trying to settle above the resistance at 1.3850. A move above this level will push USD/CAD towards 1.3900.

USD/JPY Settled Above The 148 Level

USD/JPY is testing new highs as the BoJ does not intervene to protect the yen. USD/JPY has already managed to settle above the 148 level and is moving towards the psychologically important 150 level.

The BoJ remains dovish and refuses to raise rates. If the BoJ does not intervene, we’ll see a test of the 150 level soon.

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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