EUR/USD, GBP/USD, NZD/USD, USD/JPY – U.S. Dollar Gains More Ground As Treasury Yields Rise

Key Insights

• EUR/USD remained under pressure after the disappointing Industrial Production data from Germany. 
• GBP/USD tested the psychologically important 1.2000 level. 
• AUD/USD settled near 0.6900 after RBA raised the interest rate from 3.1% to 3.35%.

U.S. Dollar

U.S. Dollar Index is trying to settle above the 104 level as rally continues. Treasury yields are moving higher, which is bullish for the American currency.

U.S. trade deficit increased less than expected in December. The report had minimal impact on currency dynamics as traders remained focused on the Fed policy outlook and rising Treasury yields.

EUR/USD

EUR/USD remains under pressure as traders price in a more aggressive Fed. Today, traders also focused on the Industrial Production data from Germany. The report indicated that Germany’s Industrial Production declined by 3.1% on a month-over-month basis, compared to analyst consensus of -0.7%. The disappointing report put additional pressure on the European currency.

GBP/USD

GBP/USD is currently trying to settle below the psychologically important 1.2000 level. Halifax House Price Index report showed that house prices remained unchanged in January, compared to analyst consensus of -0.8%. Traders ignored housing data and continued to prepare for a more hawkish Fed.

NZD/USD

NZD/USD pulled back below the 0.6300 level after an unsuccessful attempt to settle above the 50 EMA at 0.6335.

AUD/USD faced strong resistance near 0.6950 and declined towards the 0.6900 level. RBA raised the interest rate from 3.1% to 3.35%, in line with the analyst consensus. RBA governor Philip Lowe noted that global inflation remained very high, but these comments did not provide sufficient support to the Australian dollar.

Meanwhile, USD/CAD remained stuck near the 1.3450 level despite the rebound in the oil markets.

USD/JPY

USD/JPY faced resistance near the 20 EMA at 132.85 and pulled back towards the 131.50 level. The move was likely driven by profit-taking.

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