EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – U.S. Dollar Gains Ground As Inflation Rises To 3.4%

Key Insights

• EUR/USD pulled back as U.S. inflation exceeded analyst expectations. 
• USD/CAD gained ground as demand for commodity-related currencies declined.
• USD/JPY moved above the 146.00 level. 

U.S. Dollar

U.S. Dollar Index gains ground as traders react to U.S. inflation data. Inflation Rate increased from 3.1% in November to 3.4% in December, while Core Inflation Rate declined from 4% to 3.9%. Both reports exceeded analyst estimates, providing support to the American currency.

In case U.S. Dollar Index manages to settle above the 103.00 level, it will head towards the next resistance, which is located in the 103.50 – 103.75 range.

EUR/USD

EUR/USD pulls back as traders focus on U.S. inflation reports. Higher-than-expected inflation forced traders to reduce their bets on aggressive rate cuts from the Fed.

A move below the support at 1.0925 – 1.0950 will push EUR/USD towards the next support at 1.0810 – 1.0830.

GBP/USD

GBP/USD is losing ground as traders focus on general strength of the U.S. dollar.

A successful test of the nearest support at 1.2650 – 1.2685 will push GBP/USD towards the 1.2600 level.

USD/CAD

USD/CAD gains ground despite the rally in the oil markets. Other commodity-related currencies are also under pressure due to the sell-off in the precious metals’ sector.

If USD/CAD stays above the 1.3410 level, it will head towards the resistance at 1.3480 – 1.3500.

USD/JPY

USD/JPY gained some ground as traders bet on a less dovish Fed. Meanwhile, BoJ is expected to stick to its ultra-dovish policy, which is bearish for the yen.

From the technical point of view, USD/JPY climbed above the resistance at 144.65 – 145.00 and is moving towards the next resistance level at 147.00 – 147.50.

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