EUR/USD, GBP/USD, USD/CAD, USD/JPY – U.S. Dollar Retreats On Debt Ceiling Optimism

Key Insights

• U.S. dollar moved lower as traders bet that U.S. would raise the debt ceiling in the upcoming days. 
• EUR/USD rebounded towards the 1.0750 level. 
• USD/CAD declined towards 1.3450 as commodity markets rebounded after the recent sell-off. 

U.S. Dollar

U.S. Dollar Index is under strong pressure as traders bet that the debt ceiling deal would be approved soon. Treasury yields are moving lower, which is bearish for the American currency.

In case the U.S. Dollar Index settles below the support at 103.50, it will head towards the next support level, which is located at 103.20. A move below this level will push the U.S. Dollar Index towards the support at 103.00.

R1:103.75 – R2:104.10 – R3:104.45

S1:103.50 – S2:103.20 – S3:103.00

EUR/USD

EUR/USD rebounded from multi-week lows as traders bet on a less hawkish Fed. Today, traders also focused on the Euro Area inflation reports. Euro Area Inflation Rate declined from 7% in April to 6.1% in May, while Euro Area Core Inflation Rate decreased from 5.6% to 5.3%.

If EUR/USD settles above 1.0750, it will move towards the next resistance level at 1.0775. A successful test of this level will push EUR/USD towards the resistance at 1.0800.

R1:1.0750 – R2:1.0775 – R3:1.0800

S1:1.0730 – S2:1.0700 – S3:1.0670

GBP/USD

GBP/USD continued to rebound as Treasury yields declined. Traders bet that the BoE will be more hawkish than the Fed in the second half of the year.

A move above the 1.2550 level will push GBP/USD towards the resistance at 1.2590. In case GBP/USD manages to settle above 1.2590, it will head towards the next resistance level at 1.2640.

R1:1.2550 – R2:1.2590 – R3:1.2640

S1:1.2500 – S2:1.2485 – S3:1.2470

USD/CAD

USD/CAD declined as commodity markets rebounded after the recent sell-off. Other commodity-related currencies have also enjoyed strong support in today’s trading session.

A successful test of the support at 1.3440 will push USD/CAD towards the next support level, which is located at 1.3410. If USD/CAD declines below this level, it will move towards the support at 1.3380.

R1:1.3485 – R2:1.3530 – R3:1.3565

S1:1.3440 – S2:1.3410 – S3:1.3380

USD/JPY

USD/JPY remains under pressure as Treasury yields are moving lower. The dynamics of Treasury yields serve as the key catalyst for USD/JPY due to the ultra-dovish policy of the BoJ.

If USD/JPY settles below the 138.70 level, it will head towards the support at 137.50. A move below 137.50 will open the way to the test of the support at 136.50.

R1:139.60 – R2:140.50 – R3:141.60

S1:138.70 – S2:137.50 – S3:136.50

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