U.S. Dollar Gains Ground Amid Sell-Off In Bond Markets: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Tests New Highs As Traders Focus On Bond Markets

U.S. Dollar Index gains ground as traders focus on the situation in the Middle East and react to rising Treasury yields.

The yield of 30-year Treasuries climbed above the 5.18% level as traders worried that rising inflation will force the Fed to raise rates. It should be noted that bond markets in the Eurozone have also found themselves under strong pressure as traders worried about the impact of the Middle East war.

Traders also had a chance to take a look at the Pending Home Sales report. The report showed that Pending Home Sales increased by +1.4% month-over-month in April, compared to analyst forecast of +1%.

Currently, U.S. Dollar Index is trying to settle above the 99.40 level. In case this attempt is successful, U.S. Dollar Index will move towards the next resistance, which is located in the 99.70 – 99.85 range.

EUR/USD Tests Support At 1.1585 – 1.1600

EUR/USD is losing ground as traders focus on rising tensions in the Middle East and worry that U.S. may restart the military operation against Iran.

EUR/USD attempts to settle below the support level at 1.1585 – 1.1600. In case EUR/USD manages to settle below the 1.1585 level, it will head towards the next support at 1.1500 – 1.1515.

GBP/USD Moves Lower As UK Unemployment Rate Exceeds Expectations

GBP/USD moved lower as traders focused on the UK Unemployment Rate report. The report indicated that Unemployment Rate increased from 4.9% in February to 5% in March, compared to analyst forecast of 4.9%.

The nearest support level for GBP/USD is located in the 1.3335 – 1.3350 range. A successful test of this level will open the way to the test of the next support at 1.3185 – 1.3200. RSI is in the moderate territory, so there is plenty of room to gain downside momentum in the near term.

USD/CAD Gains Ground As Canada’s Inflation Rate Misses Estimates

USD/CAD gained some ground as traders focused on inflation data from Canada. Inflation Rate increased from 2.4% in March to 2.8% in April, compared to analyst consensus of 3.1%. Core Inflation Rate declined from 2.5% to 2.1%, while analysts expected that it would increase to 2.6%.

Other commodity-related currencies have found themselves under pressure as traders focused on the strong pullback in precious metals markets.

In case USD/CAD settles above the resistance at 1.3775 – 1.3790, it will head towards the next resistance level at 1.3860 – 1.3875. On the support side, a move below the 1.3750 level will open the way to the test of the support at 1.3700 – 1.3715.

USD/JPY Remains Stuck Near The 159.00 Level

USD/JPY continues its attempts to settle above the 159.00 level as traders focus on the better-than-expected GDP Growth Rate report from Japan. The report showed that GDP Growth Rate was +0.5% in the first quarter, compared to analyst forecast of +0.4%.

The yield of Japan’s 10-year government bonds climbed above 2.80%, the highest level since 1996! Traders are worried about the country’s financial stability, which is bearish for the yen.

A move above the 159.00 level will push USD/JPY towards the key 160.00 level. In absence of interventions from the Bank of Japan, USD/JPY may quickly climb above the 160.00 level and move towards the resistance at 161.50 – 162.00.

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