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EUR/USD, GBP/USD, USD/CAD, USD/JPY – U.S. Dollar Gains Ground As PCE Price Index Exceeds Expectations

By:
Vladimir Zernov
Published: May 26, 2023, 16:18 GMT+00:00

The Fed may be forced to raise rates this summer as its favorite inflation gauge has unexpectedly moved higher.

U.S. Dollar

In this article:

Key Insights

  • EUR/USD made an attempt to settle below 1.0700 as traders prepared for a more hawkish Fed after the release of the PCE Price Index report. 
  • USD/CAD pulled back as oil markets rebounded after the recent sell-off. 
  • USD/JPY tested new highs as traders focused on rising Treasury yields. 

U.S. Dollar

DXY
DXY 260523 Daily Chart

U.S. Dollar Index gains ground as traders react to the PCE Price Index report, which showed that PCE Price Index increased from 4.2% in March to 4.4% in April, compared to analyst consensus of 4.1%. PCE Price Index is Fed’s favorite inflation gauge, so traders bet that Fed will be forced to raise rates this summer.

In case the U.S. Dollar Index settles above the resistance at 104.45, it will move towards the next resistance level at 104.75. On the support side, a move below 104.10 will push the U.S. Dollar Index towards the support level at 103.75.

R1:104.45 – R2:104.75 – R3:105.10

S1:104.10 – S2:103.75 – S3:103.50

EUR/USD

EUR/USD
EUR/USD 260523 Daily Chart

EUR/USD remains under pressure as traders prepare for a more hawkish Fed after the release of the PCE Price Index report.

A successful test of the support at 1.0700 will open the way to the test of the next support level at 1.0670. In case EUR/USD declines below this level, it will move towards the support at 1.0630.

R1:1.0730 – R2:1.0760 – R3:1.0790

S1:1.0700 – S2:1.0670 – S3:1.0630

GBP/USD

GBP/USD
GBP/USD 260523 Daily Chart

GBP/USD made an attempt to rebound but lost momentum and pulled back as Treasury yields continued to move higher.

If GBP/USD declines below the support at 1.2300, it will move towards the next support level at 1.2275. A successful test of this level will push GBP/USD towards the support at 1.2240.

R1:1.2345 – R2:1.2370 – R3:1.2410

S1:1.2300 – S2:1.2275 – S3:1.2240

USD/CAD

USD/CAD
USD/CAD 260523 Daily Chart

USD/CAD pulled back as oil markets and precious metals rebounded after the recent sell-off.

In case USD/CAD settles below the support at 1.3600, it will move towards the next support level at 1.3565. A move below 1.3565 will open the way to the test of the support at 1.3530.

R1:1.3640 – R2:1.3665 – R3:1.3695

S1:1.3600 – S2:1.3565 – S3:1.3530

USD/JPY

USD/JPY
USD/JPY 260523 Daily Chart

USD/JPY tests new highs as traders remain focused on rising Treasury yields. The yield of 2-year Treasuries has recently managed to settle above the 4.60% level and continues to move higher.

A successful test of the resistance at 140.50 will push USD/JPY towards the next resistance level at 141.60. If USD/JPY climbs above this level, it will move towards the next resistance at 142.25.

R1:140.50 – R2:141.60 – R3:142.25

S1:139.60 – S2:138.70 – S3:137.50

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

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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