EUR/USD, GBP/USD, USD/CAD, USD/JPY – U.S. Dollar Tests Multi-Week Highs Despite Default Concerns

Key Insights

• EUR/USD tested multi-week lows as Euro Area Inflation Rate met analyst expectations. 
• USD/CAD pulled back from session highs as oil markets moved higher. 
• USD/JPY tested new highs as traders focused on rising Treasury yields. 

U.S. Dollar

U.S. Dollar Index tested new highs amid rising Treasury yields. Today, traders focused on the housing reports, which indicated that Building Permits declined by 1.5% while Housing Starts grew by 2.2%. U.S. President Joe Biden has recently said that U.S. will not default, but his comments did not have a material impact on forex market dynamics.

In case the U.S. Dollar Index settles above the 103 level, it will head towards the next resistance at 103.25. A successful test of the resistance at 103.25 will push the U.S. Dollar Index towards the next resistance at 103.50.

R1:103.00 – R2:103.25 – R3:103.50

S1:102.80 – S2:102.65 – S3:102.30

EUR/USD

EUR/USD tested new lows as traders focused on the general strength of the U.S. dollar. The final reading of the Euro Area Inflation Rate report showed that Euro Area Inflation Rate increased from 6.9% in March to 7% in April, in line with analyst expectations. The report had no impact on currency dynamics.

A move below the support at 1.0820 will push EUR/USD towards the next support level at 1.0790. In case EUR/USD declines below this level, it will head towards the support at 1.0760.

R1:1.0840 – R2:1.0880 – R3:1.0910

S1:1.0820 – S2:1.0790 – S3:1.0760

GBP/USD

GBP/USD is mostly flat in volatile trading. At this point, it looks that market sentiment remains bullish, although GBP/USD will need additional positive catalyst to gain upside momentum.

A move above the resistance at 1.2500 will push GBP/USD towards the next resistance level at 1.2525. If GBP/USD climbs above 1.2525, it will head towards the next resistance at 1.2550.

R1:1.2500 – R2:1.2525 – R3:1.2550

S1:1.2460 – S2:1.2440 – S3:1.2410

USD/CAD

USD/CAD pulled back from session highs as oil markets moved higher. WTI oil gained upside momentum after the release of the EIA report, which showed that domestic oil production declined from 12.3 million bpd to 12.2 million bpd.

In case USD/CAD settles below the support at 1.3450, it will head towards the next support level at 1.3410. On the upside, a move above the resistance at 1.3490 will open the way to the test of the resistance at 1.3530.

R1:1.3490- R2:1.3530 – R3:1.3565

S1:1.3450 – S2:1.3410 – S3:1.3385

USD/JPY

USD/JPY gained more ground as Treasury yields continued to move higher. Currently, the yield of 2-year Treasuries is trying to settle above the 4.15% level. In case this attempt is successful, it will move towards the resistance at 4.20%, which will be bullish for USD/JPY.

If USD/JPY manages to settle above the resistance at 137.50, it will head towards the next resistance level at 138.70. A successful test of this level will push USD/JPY towards the 139.60 level.

R1:137.50 – R2:138.70 – R3:139.60

S1:137.00 – S2:136.50 – S3:135.75

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