EUR/USD, GBP/USD, USD/CAD, USD/JPY – U.S. Dollar Retreats After GDP Report

Key Insights

• EUR/USD rallied above the 1.0900 level as Germany’s inflation exceeded analyst expectations. 
• USD/CAD pulled back below the 1.3550 level. 
• USD/JPY tested resistance at the 20 EMA at 132.75.

U.S. Dollar

U.S. dollar remains under pressure as traders bet that the Fed will not be able to raise rates at the next meeting. The FedWatch Tool indicates that the Fed may be forced to cut rates in 2023.

Treasury yields show mixed dynamics as the bond market stabilizes after the recent volatility. The yield of 2-year Treasuries settled above the 4.10% level, while the yield of 10-year Treasuries climbed above 3.55%. It remains to be seen whether the continuation of the Treasury yields rebound will provide support to the U.S. dollar as currency traders have mostly ignored the developments in bond markets in recent days.

Today, traders also focused on the GDP Growth Rate report, which missed analyst expectations and served as an additional bearish catalyst for the U.S. dollar.

EUR/USD

EUR/USD moved above the 1.0900 level after Germany’s inflation exceeded analyst expectations. Germany’s Inflation Rate declined from 8.7% in February to 7.4% in March, compared to analyst consensus of 7.3%. Germany’s Inflation Rate is declining as prices jumped in March 2022. On a month-over-month basis, prices are moving higher at a robust pace. In March 2023, prices increased by 0.8% on a month-over-month basis.

GBP/USD

GBP/USD climbed above 1.2350 and is moving towards the 1.2400 level. Traders remain focused on Fed policy outlook, which is bullish for GBP/USD.

USD/CAD

USD/CAD settled below the 1.3550 level as oil markets continued to move higher amid supply worries. Other commodity-related currencies have also managed to gain upside momentum in today’s trading session. AUD/USD climbed back above 0.6700, while NZD/USD moved above the 0.6250 level.

USD/JPY

USD/JPY continues its attempts to settle above the 20 EMA at 132.75. In case USD/JPY manages to climb above this level, it will head towards the next resistance at the 50 EMA at 133.30.

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