U.S. Dollar (DXY) Is Mostly Flat Despite Profit-Taking

Key Insights

• U.S. dollar managed to rebound from session lows. 
• EUR/USD remains under pressure after explosions in natural gas pipelines. 
• GBP/USD is trading above 1.0750.

U.S. Dollar Moved Away From Session Lows

U.S. Dollar Index settled near the 114 level as traders took some profits off the table after the recent rally.

Interestingly, Treasury yields continue to move higher, and the yield of 10-year Treasuries is trying to settle above the 3.95% level. In case this attempt is successful, it will move towards 4.00%, which will be bullish for the U.S. dollar.

Today, the U.S. released Durable Goods Orders report, which indicated that Durable Goods Orders declined by 0.2% month-over-month in August, compared to analyst consensus of -0.4%.

New Home Sales increased by 28.8% month-over-month in August. CB Consumer Confidence grew from 103.2 in August to 108 in September, compared to analyst consensus of 104.5.

U.S. economic reports indicated that the economy remained in a decent shape. At this point, the U.S. economy is definitely stronger than its developed peers, which provides additional support to the American currency.

EUR/USD Remains Under Pressure

EUR/USD is currently trying to settle below the 0.9600 level as traders fail to find positive catalysts for the European currency.

The mysterious leaks from Nord Stream pipelines may serve as an additional bearish catalyst for EUR/USD. Most likely, these leaks were caused by explosions.

As usual, all parties involved will blame each other, but the key takeaway is that Europe will not get natural gas through these pipelines in winter even if there is a political will to restore supplies.

EUR/USD is oversold, but there is more room to gain additional downside momentum. In case EUR/USD manages to settle below 0.9590, it will head towards the next support at 0.9550. A move below this level will push EUR/USD towards 0.9500.

On the upside, the nearest significant resistance level is located at 0.9670. If EUR/USD climbs back above this level, it will head towards 0.9725. A successful test of this level will open the way to the test of the resistance at 0.9810. Traders should note that the recent sell-off was strong, and there are big gaps between levels. In this situation, they should be prepared for fast moves.

GBP/USD Attempts To Rebound

GBP/USD has managed to settle above 1.0750 as the pound continues its attempts to rebound after the huge sell-off.

Markets are shocked by UK’s plans to cut taxes and increase borrowing. The yield of UK 10-year government bonds is testing new highs near 4.38%.

The dynamics of UK government debt markets indicate that the panic is not over yet. In this environment, GBP/USD may find itself under more pressure after the first wave of profit-taking.

USD/CAD Is Trading Near 1.3700

USD/CAD pulled back towards 1.3650 before rebounding to 1.3700 as traders remained focused on the safety of the U.S. dollar.

Commodity markets are moving higher today, but this rebound does not provide significant support to commodity-related currencies.

AUD/USD is mostly flat, trading near 0.6450. NZD/USD made an attempt to settle above 0.5700 but pulled back towards the 0.5650 level.

USD/JPY Looks Ready To Test The Key 145 Level

USD/JPY is trading near the 145 level as traders believe that the BoJ does not have enough firepower for interventions at these levels.

Fundamentally, the yen should stay weak as the BoJ refuses to raise rates when the Fed is raising them aggressively.

Technically, the key question is whether the BoJ is ready to defend the 145 level or it will allow USD/JPY to move towards the 150 level.

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