U.S. Dollar Retreats From Session Highs As U.S. Pauses Tariffs On Mexico: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Pulls Back From Session Highs

U.S. Dollar Index pulled back from session highs as Donald Trump said that U.S. tariffs on Mexico were paused for a month. Mexico agreed to reinforce the border to fight against the flow of illegal drugs. Trump has also spoken to Canada’s Prime Minister Trudeau, but no deal was reached. Trump is expected to speak with Trudeau again at 3 p.m. ET.

The nearest support level for U.S. Dollar Index is located in the 108.30 – 108.50 range. A move below the 108.30 level will open the way to the test of the next support at 106.80 – 107.00.

EUR/USD Rebounds As Traders Focus On Tariffs

EUR/USD rebounded from session lows as traders reacted to tariff news. In the EU, Manufacturing PMI improved from 45.1 in December to 46.6 in January, compared to analyst forecast of 46.1. Numbers below 50 show contraction.

In case EUR/USD climbs above the resistance at 1.0335 – 1.0350, it will head towards the next resistance level at 1.0420 – 1.0435.

GBP/USD Attempts To Settle Above 1.2400

GBP/USD moved higher as traders focused on the trade war and reacted to the better-than-expected UK Manufacturing PMI report. The report showed that UK Manufacturing PMI increased from 47.0 in December to 48.3 in January, compared to analyst forecast of 48.2.

If GBP/USD settles above the 50 MA at 1.2408, it will move towards the resistance level at 1.2485 – 1.2500.

USD/CAD Tests Support At 1.4540 – 1.4560

USD/CAD pulled back from session highs as traders bet that Canada may reach a deal with the U.S.

A successful test of the support at 1.4540 – 1.4560 will push USD/CAD towards the next support level at 1.4330 – 1.4350.

USD/JPY Stays Range-Bound

USD/JPY is losing some ground as traders focus on the dynamics of Treasury yields. The yield of 2-year Treasuries climbed towards the 4.25% level, while the yield of 10-year Treasuries pulled back towards 4.50%.

In case USD/JPY manages to settle below the support at 153.50 – 154.00, it will head towards the next support level at 151.50 – 152.00.

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