U.S. Dollar Gains Ground Amid Rising Tensions In the Middle East: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Starts The Week On A Strong Note

U.S. Dollar Index gains ground as traders focus on rising geopolitical tensions. Iran said that it attacked an American vessel with missiles. U.S. denied the report.

Meanwhile, Iran attacked UAE with drones and missiles. Brent oil gained 5% as traders focused on recent developments in the Middle East. As a result, demand for safe-haven assets increased, providing additional support to the U.S. dollar.

Today, traders had a chance to take a look at the Factory Orders report for March. The report indicated that Factory Orders increased by +1.5% month-over-month, compared to analyst forecast of +0.5%.

Currently, U.S. Dollar Index is trying to settle above the 50 MA at 98.51. In case this attempt is successful, U.S. Dollar Index will move towards the next resistance level, which is located in the 98.80 – 99.00 range.

EUR/USD Retreats As Geopolitical Tensions Rise

EUR/USD pulled back as trades focused on escalation in the Middle East. In the EU, ECB Governing Council member Peter Kazimir noted that the central bank would likely raise interest rates at the next meeting in June due to high energy prices.

The nearest support level for EUR/USD is located in the 1.1665 – 1.1680 range. If EUR/USD manages to settle below the 1.1665 level, it will move towards the next support at 1.1585 – 1.1600.

GBP/USD Pulls Back Amid Falling Demand For Risk Assets

GBP/USD is losing ground as traders react to rising oil prices. Falling demand for risk assets put pressure on the British pound. There are no important economic reports scheduled to be released in the UK today, so traders will stay focused on general market sentiment.

From the technical point of view, GBP/USD settled below the support at 1.3570 – 1.3585 and is trying to settle below the 50 MA at 1.3525. If GBP/USD manages to settle below the 1.3525 level, it will head towards the next support at 1.3450 – 1.3465.

USD/CAD Gains Ground As Traders Sell Commodity-Related Currencies

USD/CAD is moving higher amid pullback in precious metals markets. Other commodity-related currencies are also losing ground as traders worry that high energy prices will put significant pressure on demand for commodities.

USD/CAD attempts to settle above the resistance level at 1.3620 – 1.3635. If USD/CAD climbs above the 1.3635 level, it will get to the test of the 50 MA at 1.3647. A move above the 50 MA will push USD/CAD towards the resistance level at 1.3700 – 1.3715. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

USD/JPY Heads Towards 157.50 As Treasury Yields Rise

USD/JPY is moving higher, supported by rising Treasury yields. The yield of 2-year Treasuries climbed above the 3.97% level, while the yield of 10-year Treasuries tested the 4.45% level. Bond traders sold U.S. Treasuries amid geopolitical tensions, pushing their yields higher.

If USD/JPY manages to settle above the 157.50 level, it will head towards the resistance at 158.00 – 158.50. A successful test of the resistance at 158.00 – 158.50 will push USD/JPY towards the 50 MA at 158.83.

The key question is whether BoJ is ready to intervene again in case USD/JPY moves back towards the 159.00 – 160.00 area. Fundamentally, the Japanese yen should remain under pressure due to rising yields in the U.S.

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