GBP/USD Settles Near 1.2000 After An Unsuccessful Test Of The 1.1900 Level

Key Insights

• Forex markets are extremely volatile today, and the U.S. dollar is gaining ground against a broad basket of currencies. 
• EUR/USD is down by more than 1% in today’s trading session. 
• Commodity-related currencies are under pressure amid a pullback in the oil and natural gas markets. 

U.S. Dollar Rebounds From Multi-Month Lows

U.S. Dollar Index gained upside momentum after the release of the U.S. Manufacturing PMI report and moved above the 104.50 level.

Treasury yields are moving lower today, but demand for the safe-haven U.S. dollar remains strong. In case U.S. Dollar Index manages to settle back above 104.50, it will move towards session highs at 104.85.

EUR/USD Moved Out Of The Recent Trading Range

EUR/USD settled below the 1.0600 and made an attempt to get below 1.0520 before rebounding towards 1.0550.

Today, EUR/USD traders focused on the inflation data from Germany. Germany’s Inflation Rate declined from 10% in November to 8.6% in December, compared to analyst consensus of 9.1%. Germany’s Unemployment Rate remained unchanged at 5.5%, while analysts expected that it would grow to 5.6%.

It remains to be seen whether the slowdown in Germany’s inflation will change the hawkish stance of the ECB, which is focused on the fight against inflation.

GBP/USD Tested Support At 1.1900

It was a volatile trading session for GBP/USD. Earlier, the pound found itself under significant pressure, and GBP/USD made an attempt to settle below the 1.1900 level. This attempt was not successful, and GBP/USD moved towards 1.2060 before pulling back towards the 1.2000 level.

UK Manufacturing PMI declined from 46.5 in November to 45.3 in December, compared to analyst consensus of 44.7. While the report exceeded analyst expectations, UK manufacturing industry remains under significant pressure. At this point, it looks that traders are simply nervous at the start of the year.

AUD/USD Is Under Pressure

The pullback in the oil and natural gas markets had a negative impact on commodity-related currencies today. AUD/USD settled near 0.6750, while NZD/USD tested the 0.6200 level before rebounding towards 0.6250.

Canadian dollar has also found itself under pressure, and USD/CAD made an attempt to settle above 1.3680.

USD/JPY Tried To Settle Below The 130 Level

USD/JPY  made an attempt to settle below the 130 level but received support near 129.50 and rebounded closer to the 131 level. Trading action is volatile, and it looks that traders haven’t made up their minds on the direction of USD/JPY at the start of the year.

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