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EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – U.S. Dollar Rallies After CPI Data
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Inflation is raising its ugly head again, so Fed may be forced to keep rates at current levels until June.
Key Insights
- EUR/USD pulled back towards 1.0700 as U.S. inflation exceeded analyst expectations.
- USD/CAD is trying to settle above 1.3550 as traders react to U.S. inflation reports.
- USD/JPY climbed above the psychologically important 150.00 level as Treasury yields tested new highs.
U.S. Dollar
U.S. Dollar Index rallied after the release of CPI data for January. Inflation Rate declined from 3.4% to 3.1%, while Core Inflation Rate remained unchanged at 3.9%. Both reports exceeded analyst expectations. FedWatch Tool indicates that markets expect Fed to start cutting rates in June, which is a major shift in Fed policy outlook. Previously, Fed was expected to cut rates in May.
In case U.S. Dollar Index settles above the 105 level, it will head towards the next resistance, which is located in the 105.75 – 106.00 range.
EUR/USD
EUR/USD moved lower as traders focused on U.S. inflation data. Today, traders also had a chance to take a look at the Euro Area ZEW Economic Sentiment Index. The report showed that Economic Sentiment improved from 22.7 in January to 25.0 in December, compared to analyst consensus of 20.1.
In case EUR/USD settles below the support at 1.0730 – 1.0750, it will head towards the next support level at 1.0640 – 1.0660.
GBP/USD
GBP/USD is moving lower as traders react to U.S. inflation reports. In the UK, Unemployment Rate declined from 3.9% in November to 3.8% in December, compared to analyst consensus of 4%.
If GBP/USD stays below the 1.2600 level, it will head towards the support at 1.2500 – 1.2520.
USD/CAD
USD/CAD tested new highs as traders focused on general strength of the American currency. Rising oil markets did not provide support to the Canadian dollar and precious metals markets suffered a strong sell-off.
From the technical point of view, USD/CAD settled above the resistance at 1.3480 – 1.3500 and is moving towards the next resistance at 1.3600 – 1.3620.
USD/JPY
USD/JPY rallied as traders reacted to rising Treasury yields. At this point, there are no signs of interventions from the BoJ.
In case USD/JPY stays above the 150.00 level, it will move towards the resistance at 151.50 – 152.00.
For a look at all of today’s economic events, check out our economic calendar.
About the Author
Vladimir Zernovauthor
Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
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