U.S. Dollar (DXY) Gains Ground After Initial Jobless Claims Exceed Expectations

Key Insights

• U.S. dollar continues to rebound as Treasury yields rise. 
• GBP/USD is under pressure as traders sell UK government bonds. 
• USD/JPY remains stuck near the important 145 level. 

U.S. Dollar Index Is Moving Towards The 112 Level

U.S. dollar is moving higher after the release of the Initial Jobless Claims report, which indicated that 219,000 Americans filed for unemployment benefits in a week. Analysts expected Initial Jobless Claims of 203,000.

Meanwhile, Treasury yields continue to rebound, which is bullish for the U.S. dollar.

The yield of 2-year Treasuries is testing the 4.20% level, while the yield of 10-year Treasuries is trying to settle above 3.80%. In case Treasury yields move towards yearly highs, the U.S. dollar will get more support.

EUR/USD Remains Under Pressure

EUR/USD is currently trying to settle below 0.9820 as traders react to the Retail Sales data from the EU. Euro Area Retail Sales declined by 2% year-over-year in August, compared to analyst consensus of -1.7%. Consumers cut spending as they face higher costs due to the energy crisis in the EU.

The nearest support level for EUR/USD is located at 0.9810. In case EUR/USD declines below this level, it will head towards the next support, which is located at 0.9725. A successful test of this support level will open the way to the test of the next support at 0.9670.

On the upside, the nearest resistance level for EUR/USD is located at the 20 EMA at 0.9870. If EUR/USD gets above the 20 EMA, it will head towards the resistance at 0.9910. A move above 0.9910 will push EUR/USD towards the resistance at 0.9950.

GBP/USD Declines As Traders Continue To Take Profits After The Huge Rally

GBP/USD declined towards 1.1220 as the strong pullback continued. Importantly, the yield of UK government bonds has started to move higher again, which indicates that traders are worried about rising inflation in UK.

Previously, the BoE decided to provide support to the bond market, but it looks that the pressure on the UK government bond continues to increase. In this environment, traders may get worried about a potential debt crisis, which will be bearish for the pound.

NZD/USD Retreats After Yesterday’s Rebound

NZD/USD gained strong downside momentum and moved towards 0.5670 as the U.S. dollar rebounded against a broad basket of currencies.

Other commodity-related currencies have also found themselves under pressure. AUD/USD declined towards 0.6430, while USD/CAD managed to settle back above the 1.3700 level.

USD/JPY Is Mostly Flat As Traders Are Not Ready To Test The Key 145 Level

USD/JPY continues to trade near the 145 level as traders are worried that the BoJ will intervene in case it gets above 145.

The potential actions of the BoJ remain the key catalyst for USD/JPY traders. It should be noted that rising yields in the U.S. may ultimately push USD/JPY above 145 despite traders’ fears.

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