EUR/USD, GBP/USD, USD/CAD, USD/JPY – U.S. Dollar Pulls Back As Demand For Safe-Haven Assets Declines

Key Insights

• U.S. Dollar Index settled below the 103 level. 
• EUR/USD rebounded towards the 1.0800 level. 
• USD/JPY climbed above 131.50 as Treasury yields moved higher. 

U.S. Dollar

U.S. Dollar Index pulled back below the 103 level as demand for safe-haven assets declined. Dallas Fed Manufacturing Index missed expectations, but traders focused on the rebound of regional banks’ stocks in the U.S. Traders bet that regulators will be able to contain the banking crisis, so demand for safe-haven assets declines, which is bearish for the U.S. dollar.

EUR/USD

EUR/USD is moving towards the 1.0800 level as U.S. dollar pulls back. Today, EUR/USD traders focused on the Ifo Business Climate report from Germany. The report indicated that Ifo Business Climate improved from 91.1 in February to 93.3 in March, which was bullish for the euro.

At this point, market participants believe that the ECB will remain focused on its fight against inflation despite problems in the banking sector. Thus, the ECB will be forced to raise rates, providing additional support to the euro.

GBP/USD

GBP/USD rebounded towards the 1.2280 level despite the rebound in Treasury yields. Today, GBP/USD traders focused on the dynamics of demand for safe-haven assets. As demand for riskier assets increased, GBP/USD moved higher.

USD/CAD

USD/CAD pulled back below the 1.3700 level as oil markets rebounded towards recent highs. Other commodity-related currencies failed to gain momentum in today’s trading session. NZD/USD remained stuck near the 0.6200 level, while AUD/USD continued its attempts to settle below 0.6650.

USD/JPY

USD/JPY rebounded towards the 131.50 level as Treasury yields moved higher. The dynamics of Treasury yields remain the key catalyst for USD/JPY, so USD/JPY often moves in the opposite direction to the U.S. Dollar Index.

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