EUR/USD, GBP/USD, NZD/USD, USD/JPY – U.S. Dollar Remains Under Pressure After PPI Data

Key Insights

• U.S. dollar pulled back after PPI and Retail Sales reports. 
• USD/JPY was extremely volatile after the BoJ decision. 
• NZD/USD tested multi-month highs. 

U.S. Dollar Tested New Lows

U.S. Dollar Index declined to new lows after the release of PPI and Retail Sales data.

Traders bet that the Fed will not be able to push rates above the 5.00% level in 2023.

A less hawkish Fed is bearish for the American currency, so the U.S. Dollar Index is trying to settle below 101.50. A move below this level will open the way to the test of the support at the 101 level.

EUR/USD Stays Range-Bound

EUR/USD made another attempt to settle above the resistance at 1.0870 but lost momentum and pulled back. This resistance level has already been tested many times and proved its strength.

While the ECB is expected to stay hawkish in the near term, EUR/USD will need additional catalysts to move above the 1.0870 level.

GBP/USD Rallies As Core Inflation Remains Unchanged

GBP/USD rallied towards the 1.2400 level as traders focused on the inflation data from the UK.

Inflation Rate declined from 10.7% to 10.5%, but Core Inflation Rate remained unchanged at 6.3%. Analysts expected that Core Inflation Rate would decline to 6.2%. The report served as a bullish catalyst for the pound as the BoE will have to stay hawkish in order to push the Core Inflation Rate to lower levels.

NZD/USD Tests New Highs

NZD/USD gained strong upside momentum and tested new highs at 0.6530. AUD/USD has also managed to gain some ground and moved above the psychologically important 0.7000 level.

Meanwhile, USD/CAD remained stuck near 1.3400. While oil markets continue to move higher, the Canadian dollar is not able to gain more ground against the U.S. dollar.

USD/JPY Is Mostly Flat In Volatile Session

USD/JPY  tested the 20 EMA at 131.55 but lost momentum and declined below the 128.50 level. Today, the BoJ left the interest rate unchanged at -0.1%. Some traders hoped that the BoJ will abandon its yield control policy, but the BoJ decided to stick to its previous policy. However, it looks that traders believe that the BoJ will not be able to keep bond yields at bay in 2023. Thus, they bet on rising yields in Japan, which is bullish for the yen.

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