U.S. Dollar (DXY) Gains Ground After Strong CB Consumer Confidence Report

Key Insights

• The surprising strength of CB Consumer Confidence report provided material support to the U.S. dollar. 
• GBP/USD remains under strong pressure and looks ready to test yearly lows. 
• USD/CAD managed to get back above the 1.3050 level as WTI oil retreated after yesterday’s rally. 

U.S. Dollar Rebounds From Session Lows

U.S. Dollar Index (DXY) is moving higher after the release of CB Consumer Confidence report for August. The report indicated that CB Consumer Confidence improved from 95.7 in July to 103.2 in August, compared to analyst consensus of 97.7.

The strong report may provide additional support to the American currency, as healthy consumer activity provides the Fed with an opportunity to raise the rates aggressively.

The U.S. has also released the Case-Shiller Home Price Index report for June, which indicated that home prices increased by 18.6% year-over-year compared to analyst consensus of 19.5%. Recent reports show that higher interest rates have already put pressure on the housing market.

EUR/USD Remains Stuck Near The Key 1.0000 Level

Today, EUR/USD traders had a chance to take a look at the final reading of the Euro Area Consumer Confidence report for August. The report indicated that Consumer Confidence improved from -27 in July to -24.9 in August, in line with the analyst consensus.

Euro Area Industrial Sentiment declined from 3.4 in July to 1.2 in August, while Euro Area Services Sentiment decreased from 10.4 to 8.7. The reports highlighted the weak business sentiment in Europe.

The most interesting report came from Germany, which released inflation data for August. Germany’s Inflation Rate increased by 7.9% year-over-year in August, compared to analyst consensus of 7.8%.

Tomorrow, traders will focus on inflation reports for the Euro Area, which are expected to show that Euro Area Inflation Rate increased by 9% year-over-year in August. Germany’s inflation reports show that Euro Area Inflation Rate may exceed 9%, which may provide more support to the euro.

Currently, EUR/USD continues its attempts to settle above the 1.0000 level. In case the U.S. dollar gets more support after the surprising CB Consumer Confidence report, EUR/USD will slip back below this important level.

GBP/USD Slips Towards Yearly Lows

GBP/USD is moving towards yearly lows as traders remain focused on the problems of the UK economy.

GBP/USD failed to settle above 1.1700 and is moving towards yearly lows near the 1.1650 level.

From a technical point of view, RSI is close to the oversold territory, but there is enough room to gain additional downside momentum in case DXY heads towards yearly highs.

USD/CAD Moves Above 1.3050 As Oil Markets Pull Back

USD/CAD managed to settle above the resistance at 1.3050 and is testing the next resistance level at 1.3075 amid strong sell-off in oil markets. In case USD/CAD settles above 1.3075, it will gain additional upside momentum and move towards the resistance at 1.3110. A successful test of this level will push USD/CAD towards the resistance at 1.3130.

On the support side, the previous resistance at 1.3050 will serve as the first support level for USD/CAD. If USD/CAD declines below this level, it will head towards the support at 1.3000. A move below 1.3000 will open the way to the test of the support at 1.2975.

Other commodity-related currencies are also under pressure today. AUD/USD declined towards the 0.6880 level, while NZD/USD moved below the 0.6150 level.

USD/JPY Settled Above 138.50

There is no change in the trend of USD/JPY, which has managed to settle above 138.70 and is slowly moving towards yearly highs near 139.40.

The dovish stance of the BoJ leaves few chances for Japanese yen bulls. At this point, the key question is whether the BoJ will intervene if USD/JPY tests the 140 level.

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