EUR/USD, GBP/USD, USD/CAD, USD/JPY – U.S. Dollar Retreats As Markets Calm Down

Key Insights

• U.S. dollar is losing ground as appetite for risk grows. 
• EUR/USD settled above the 1.0700 level after Germany’s PPI report.
• USD/JPY tested new lows near the 130.50 level. 

U.S. Dollar

U.S. dollar is under pressure at the start of the week despite the rebound in Treasury yields. Traders remain focused on the potential banking crisis after Switzerland’s UBS agreed to acquire the troubled Credit Suisse.

Traders bet that the Fed will be forced to cut rates in 2023 to provide additional support to the financial system, which is bearish for the American currency.

EUR/USD

EUR/USD is moving higher after the release of Producer Prices data from Germany. The report indicated that Producer Prices declined by 0.3% month-over-month in February, compared to analyst consensus of -0.5%.

On a year-over-year basis, Germany’s PPI grew by 15.8% compared to analyst consensus of +14.5%. The higher-than-expected PPI in Europe’s leading economy is bullish for the euro as it shows that ECB will have to stay hawkish to fight inflation.

GBP/USD

GBP/USD tested the 1.2250 level as traders focused on the general weakness of the U.S. dollar. The appetite for risk is growing as market participants hope that regulators will provide additional liquidity to support banks, which is bullish for riskier assets.

USD/CAD

USD/CAD declined towards the 20 EMA at 1.3660 as oil markets rebounded from yearly lows. In case USD/CAD manages to settle below the 20 EMA, it will gain additional downside momentum and move towards the next support level, which is located at 1.3630.

Other commodity-related currencies failed to gain momentum in today’s trading session. AUD/USD settled near 0.6720, while NZD/USD declined towards the 0.6250 level after an unsuccessful attempt to settle above 0.6280.

USD/JPY

USD/JPY tested new lows near 130.50 but lost momentum and rebounded above 131.50 as traders took some profits off the table after the sell-off. Most likely, traders will stay focused on the dynamics of Treasury yields. In case Treasury yields rebound from recent lows, USD/JPY may get more support.

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