EUR/USD, GBP/USD, USD/CAD, USD/JPY – U.S. Dollar Gains Ground Amid Debt Ceiling Uncertainty

Key Insights

• EUR/USD pulled back as traders reacted to the disappointing  Euro Area ZEW Economic Sentiment report. 
• GBP/USD declined below the 1.2500 level after an unsuccessful attempt to settle above the resistance at 1.2550.
• USD/JPY tested multi-week highs near the 136.50 level. 

U.S. Dollar

U.S. Dollar Index is gaining ground as Treasury yields test new highs. Today’s Retail Sales report showed that Retail Sales increased by 0.4% month-over-month in April, compared to analyst consensus of +0.8%. Meanwhile, Manufacturing Production exceeded analyst estimates, but it looks that traders were mostly focused on debt ceiling negotiations.

A move above the resistance at 102.65 will push the U.S. Dollar Index towards the next resistance level at 102.80. In case the U.S. Dollar Index climbs above this level, it will head towards the 103 level.

R1:102.65 – R2:102.80 – R3:103.00

S1:102.30 – S2:102.00 – S3:101.80

EUR/USD

EUR/USD pulls back after an unsuccessful attempt to settle above the 1.0900 level. Today, traders focused on the Euro Area ZEW Economic Sentiment Index report, which showed that Economic Sentiment declined from 6.4 in April to -9.4 in May, compared to analyst consensus of -1.

If EUR/USD settles below the support at 1.0840, it will move towards the next support level at 1.0820. A successful test of this level will open the way to the test of the support at 1.0790.

R1:1.0880 – R2:1.0910 – R3:1.0940

S1:1.0840 – S2:1.0820 – S3:1.0790

GBP/USD

GBP/USD pulled back as traders reacted to the job market data from the UK. The reports showed that UK Unemployment Rate increased from 3.8% in February to 3.9% in March. The Claimant Count Change report showed that the number of people claiming for unemployment benefits increased by 46,700 in April.

If GBP/USD settles below 1.2500, it will head towards the support at 1.2460. A move below 1.2460 will push GBP/USD towards the support level at 1.2440.

R1:1.2500 – R2:1.2525 – R3:1.2550

S1:1.2460 – S2:1.2440 – S3:1.2410

USD/CAD

USD/CAD is mostly flat in a volatile trading session. Today, traders focused on inflation reports from Canada. Inflation Rate increased from 4.3% in March to 4.4% in April, while Core Inflation Rate declined from 4.3% to 4.1%.

If USD/CAD settles back above the 1.3490 level, it will move towards the resistance at 1.3530. On the support side, a successful test of the 1.3450 level will push USD/CAD towards the support at 1.3410.

R1:1.3490 – R2:1.3530 – R3:1.3565

S1:1.3450 – S2:1.3410 – S3:1.3385

USD/JPY

USD/JPY gained ground as Treasury yields tested new highs. Rising Treasury yields are bullish for USD/JPY as the BoJ sticks to its ultra-dovish policy.

If USD/JPY settles above the 136.50 level, it will head towards the next resistance level, which is located at 137.00. A move above this level will push USD/JPY towards the resistance at 137.50.

R1:136.50 – R2:137.00 – R3:137.50

S1:135.75 – S2:135.10 – S3:134.50

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