EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – U.S. Dollar Tests Multi-Month Highs

Key Insights

• EUR/USD is feeling the squeeze, bogged down by an unfavorable Euro Area Services PMI report.
• USD/CAD flirted with resistance levels between 1.3650 – 1.3670 before retreating as buoyant oil markets lent additional support to the Canadian dollar.
• USD/JPY is moving towards the resistance at 148.00 – 149.00, prompting expectations of BoJ interventions to stabilize the yen.

U.S. Dollar

U.S. Dollar Index tests new highs as Treasury yields rise. Traders are worried that Fed may be hawkish despite problems in the manufacturing sector.

Taking a look at the daily chart, RSI is close to the overbought territory, but there is enough room to gain additional upside momentum. A move above the 104.70 level will push U.S. Dollar Index towards the resistance at 105.65 – 105.90.

EUR/USD

EUR/USD remains under pressure as traders react to the disappointing Euro Area Services PMI report, which showed that Euro Area Services PMI declined from 50.9 in July to 47.9 in August.

Traders should note that RSI has already moved into the oversold territory, so the risks of a rebound are increasing.

GBP/USD

GBP/USD continues its attempts to settle below the support at 1.2590 – 1.2620 as traders focus on the general strength of the U.S. dollar.

In case GBP/USD stays below the 1.2590 level, it will head towards the support at 1.2470 – 1.2500.

USD/CAD

USD/CAD made an attempt to settle above the resistance at 1.3650 – 1.3670 but lost momentum and pulled back. Rising oil markets provided additional support to the Canadian dollar.

If USD/CAD settles back below the 50 MA at 1.3575, it will head towards the nearest support level at 1.3500 – 1.3520.

USD/JPY

USD/JPY tested multi-month highs as traders focused on rising Treasury yields.

USD/JPY is moving towards the strong resistance in the 148.00 – 149.00 range. A move above this level may force the BoJ to come up with interventions to stabilize the yen.

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