U.S. Dollar Gains Ground As 10-Year Yield Returns To 5%: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Tests New Highs As Treasury Yields Rise

U.S. Dollar Index gains ground as traders focus on rising Treasury yields. The yield of 2-year Treasuries settled above the 4.73% level, while the yield of 10-year Treasuries tested the psychologically important 5.00% level.

The nearest resistance level for U.S. Dollar Index is located in the 100.50 – 100.65 range. If U.S. Dollar Index manages to settle above the 100.65 level, it will head towards the next resistance, which is located in the 101.50 – 101.65 range.

EUR/USD Pulls Back Ahead Of The Weekend

EUR/USD is losing some ground as traders stay focused on the recent Fed decision and Warsh’s comments. FedWatch Tool indicates that there is a 57.6% probability that Fed will raise rates at the next meeting in October.

In the EU, traders focused on Germany’s PPI report. The report showed that PPI increased by +4.6% year-over-year in August, compared to analyst forecast of +4.1%.

In case EUR/USD settles below the 1.1450 level, it will head towards the nearest support at 1.1420 – 1.1435. On the upside, a successful test of the resistance at 1.1500 – 1.1515 will open the way to the test of the 50 MA at 1.1560.

GBP/USD Gains Ground As UK Retail Sales Exceed Analyst Estimates

GBP/USD rebounds as traders react to UK Retail Sales report. The report showed that Retail Sales increased by +0.5% month-over-month in August, compared to anlayst forecast of -0.2%.

If GBP/USD moves above the resistance level at 1.3400 – 1.3415, it will head towards the next resistance at 1.3470 – 1.3485. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

USD/CAD Attempts To Settle Above 1.4000

USD/CAD tests new highs as traders stay bullish despite rising precious metals markets. Other commodity-related currencies are mixed in today’s trading session.

USD/CAD continues its attempts to settle above the 1.4000 level. In case USD/CAD stays above 1.4000, it will move towards the next resistance, which is located in the 1.4065 – 1.4080 range.

USD/JPY Gains Ground As BoJ Raises Rate To 1.25%

USD/JPY gained strong upside momentum as traders focused on BoJ Interest Rate Decision. The Bank of Japan raised the interest rate from 1% to 1.25%, in line with analyst estimates. However, the BoJ did not provide clear guidance on its plans to raise rates in the future to fight inflation, so the yen found itself under pressure.

I’d note that USD/JPY moved away from session highs as Nikkei reported that BoJ conducted a rate check in the forex market.

Today, traders also had a chance to take a look at Japan’s inflation data. Inflation Rate remained unchanged at 1.9% in August, while analysts expected that it would rise to 2.1%. Core Inflation Rate decreased from 1.8% to 1.7%, compared to analyst forecast of 1.8%. Inlation data served as an additional bearish catalyst for the yen.

If USD/JPY moves above the resistance at 158.00 – 158.50, it will head towards the resistance level at 160.00 – 160.50. On the support side, a move below the 156.50 level will open the way to the test of the support at 155.00 – 155.50.

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