EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – U.S. Dollar Mixed As Traders React To PPI Data

Key Insights

• EUR/USD managed to stay above the 1.0950 level as traders bet on dovish Fed. 
• GBP/USD was mostly flat as traders reacted to the better-than-expected UK GDP report. 
• USD/JPY pulled back as the yield of 2-year Treasuries tested new lows. 

U.S. Dollar

U.S. Dollar Index is mostly flat as traders react to Producer Prices data. PPI declined by 0.1% month-over-month in December, compared to analyst consensus of +0.1%. Core PPI remained unchanged, while analysts expected that it would grow by 0.2%.

From the technical point of view, U.S. Dollar Index needs to settle above 102.70 to gain additional upside momentum in the near term.

EUR/USD

EUR/USD lacks momentum as traders wait for additional catalysts. The yield of 2-year Treasuries tested new lows today, so bond traders bet on dovish Fed despite yesterday’s inflation data. Interestingly, this move did not put any pressure on the American currency.

A move above the 1.1000 level will lead to the test of the resistance at 1.1015 – 1.1035.

GBP/USD

GBP/USD is also flat as traders react to UK GDP report, which showed that GDP increased by 0.3% month-over-month in November.

GBP/USD managed to settle above the support at 1.2650 – 1.2685 and is moving towards the nearest resistance level at 1.2820 – 1.2850.

USD/CAD

USD/CAD is swinging between gains and losses as traders monitor the dynamics of the oil markets, which react to U.S. strikes against Houthis.

If USD/CAD climbs above the resistance at 1.3380 – 1.3410, it will move towards the next resistance level at 1.3480 – 1.3500.

USD/JPY

USD/JPY is trying to settle below the 144.65 level as traders focus on falling Treasury yields.

A move below the support at 144.65 – 145.00 will open the way to the test of the next support level at 141.00 – 141.50.

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