U.S. Dollar (DXY) Pulls Back After Yesterday’s Rally

Key Insights

• Traders take some profits in the U.S. dollar after yesterday’s strong rally. 
• GBP/USD gains some ground after BoE raises rate to 2.25%. 
• USD/JPY retreats as BoJ intervenes. 

U.S. Dollar Is Under Some Pressure As Traders Take Profits

U.S. Dollar Index is losing some ground in a volatile trading session as traders take some profits off the table after yesterday’s Fed Interest Rate Decision.

Today, traders had a chance to take a look at the Initial Jobless Claims report, which indicated that 213,000 Americans filed for unemployment benefits in a week, compared to analyst consensus of 218,000. The labor market remains in a good shape, and the Fed has every reason to stay hawkish.

Meanwhile, Treasury yields are testing new highs. The yield of 2-year Treasuries is currently trying to settle above 4.13%, while the yield of 10-year Treasuries is testing the 3.65% level. Higher Treasury yields may provide additional support to the American currency.

EUR/USD Is Mostly Flat After Yesterday’s Sell-Off

EUR/USD is trying to rebound after yesterday’s sell-off. Currently, EUR/USD is trying to stay above the 0.9850 level.

Today, the EU released the flash reading of the Euro Area Consumer Confidence report for September, which indicated that Euro Area Consumer Confidence declined from -25.0 in August to -28.8 in September.

The European economy continues to suffer from the energy crisis, which puts pressure on consumer mood. The economic weakness and the hawkish Fed may put additional pressure on EUR/USD in the upcoming trading sessions.

GBP/USD Gains Some Ground After BoE Raises Rate To 2.25%

GBP/USD is trading near 1.1280 after the BoE Interest Rate Decision. The Bank of England increased the rate from 1.75% to 2.25%, in line with the analyst consensus.

The British pound continues to trade near multi-decade lows, and it will likely need strong catalysts to break out of the current downside trend.

USD/JPY Retreats As BoJ Intervenes

USD/JPY suffered a strong sell-off after the Bank of Japan intervened to provide support to the Japanese yen.

Interventions began when USD/JPY traded above 145.50. The sell-off was strong and pushed USD/JPY below the 141 level.

Interestingly, an attempt to rebound above 143 was also met with strong selling. Currently, USD/JPY is trading near the 142 level.

USD/CAD Tests New Highs

USD/CAD has recently made  an attempt to settle above 1.3540 but lost momentum and pulled back towards 1.3480.

Other commdoity-related currencies have also tested new lows today. NZD/USD made an attempt to settle below the 0.5800 level, while AUD/USD declined below 0.6600.

It should be noted that NZD/USD and AUD/USD managed to rebound from recent lows as some traders were willing to bet that the recent pullback was too strong.

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