U.S. Dollar Attempts To Move Higher As Traders Focus On CPI Data: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Stays Close To Recent Highs After CPI Report

U.S. Dollar Index was mostly flat as traders reacted to CPI data. Inflation Rate declined from 2.7% in December to 2.4% in January, compared to analyst forecast of 2.5%.

Core Inflation Rate decreased from 2.6% to 2.5%, in line with analyst estimates.

The surprising report provided significant support to Treasuries as traders rushed to bet on dovish Fed.

The yield of 2-year Treasuries pulled back towards the 3.40% level, while the yield of 10-year Treasuries declined towards the 4.05% level.

Interestingly, falling Treasury yields did not put pressure on the American currency. Forex traders believe that Fed Chair Powell may keep rates unchanged until the end of his term to highlight Fed’s independence.

The nearest resistance level for U.S. Dollar Index is located in the 97.10 – 97.25 range. In case U.S. Dollar Index climbs above the 97.25 level, it will move towards the next resistance near recent highs at 98.00 – 98.15.

EUR/USD Tests Support At 1.1835 – 1.1850

EUR/USD is flat as traders focus on U.S. CPI data and react to economic reports from the EU.

Germany’s Wholesale Prices increased by +0.9% month-over-month in January, compared to analyst consensus of +0.1%.

Euro Area employment increased by +0.7% year-over-year in the fourth quarter, while analysts expected that it would grow by +0.6%.

EUR/USD continues its attempts to settle below the nearest support at 1.1835 – 1.1850. If EUR/USD manages to settle below the 1.1835 level, it will move towards the next support, which is located in the 1.1770 – 1.1785 range.

RSI remains in the moderate territory, so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.

GBP/USD Gains Some Ground Ahead Of The Weekend

GBP/USD is swinging between gains and losses as traders focus on CPI data from the U.S.

There are no important economic reports scheduled to be released in the UK today, so traders will stay focused on Fed policy outlook.

The British pound has mostly ignored the recent political crisis in the UK, which may indicate that the currency has the potential to get stronger in the near term.

GBP/USD is trying to settle above the 50 MA at 1.3637. In case this attempt is successful, GBP/USD will move towards the next resistance level at 1.3710 – 1.3725.

On the support side, a successful test of the support at 1.3570 – 1.3585 will open the way to the test of the next support at 1.3485 – 1.3500.

USD/CAD Is Range-Bound Despite Rally In Precious Metals Markets

USD/CAD is stuck in a tight range as traders monitor the rebound in precious metals markets.

Gold managed to climb back above the $5000 level, while silver climbed above the $77.00 level. Precious metals are moving higher as traders react to U.S. inflation data.

Other commodity-related currencies are losing ground in today’s trading session, so rising commodity markets did not provide material support to this segment of the forex market.

If USD/CAD settles above the 50 MA at 1.3617, it will get to the test of the resistance level at 1.3650 – 1.3665.

USD/JPY Attempts To Rebound Sell-Off

USD/JPY is moving higher despite falling Treasury yields. Some traders are ready to bet on a rebound after the strong pullback, which pushed USD/JPY from 157.50 to 152.50.

Currently, USD/JPY is trying to settle above the 153.00 level. In case USD/JPY settles above 153.00, it will head towards the nearest resistance, which is located in the 154.50 – 155.00 range. A move above the 155.00 level will push USD/JPY towards the next resistance at 158.00 – 158.50.

If you’d like to know more about how to trade forex, please visit our educational area.