EUR/USD, GBP/USD, USD/CAD, USD/JPY – U.S. Dollar Retreats As Producer Prices Decline

Key Insights

• EUR/USD moved above the 1.0850 level as Euro Area Industrial Production exceeded expectations. 
• GBP/USD tested new highs ahead of the Fed decision. 
• USD/JPY remained range-bound while traders waited for catalysts. 

U.S. Dollar

U.S. Dollar Index is losing ground ahead of the Fed decision. PPI declined by 0.3% month-over-month in May, which was bearish for the American currency. However, the situation may change quickly if Fed’s comments are hawkish.

U.S. Dollar Index is moving towards the support area near 102.50. The general trend remains bearish, but traders should keep in mind that technical factors will not play a leading role after the Fed decision.

EUR/USD

EUR/USD gains ground as Treasury yields pull back ahead of the Fed decision. Euro Area Industrial Production increased by 1% month-over-month in April, providing additional support to EUR/USD.

From the technical point of view, EUR/SUD has just moved above the previous resistance and has a good chance to move towards the next resistance area above the 1.0900 level.

GBP/USD

GBP/USD continues to move higher at a robust pace as traders bet that BoE will be more hawkish than Fed in the upcoming months.

The key problem for the bulls is the RSI, which has already moved into the overbought territory. Typically, GBP/USD needs a pullback to continue the move if RSI shows that it is overbought.

USD/CAD

USD/CAD remains under pressure while oil markets are swinging between gains and losses after the EIA report.

It should be noted that USD/CAD is moving towards the support area in the 1.3235 – 1.3270 range, so it may need additional catalysts to gain downside momentum.

USD/JPY

USD/JPY remains stuck in the range as traders are waiting for the Fed decision and the subsequent commentary.

Traders should note expect big moves until USD/JPY moves out of the current range, which may happen soon if Fed’s comments surprise the market.

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