U.S. Dollar Gains Ground As Geopolitical Risks Rise: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Moves Higher Amid Rising Tensions In The Middle East

U.S. Dollar Index gains ground as traders focus on rising tensions in the Middle East. Oil prices gained 2.5% as U.S. and Iran exchanged military strikes.

Traders also reacted to the ISM Services PMI report. The report indicated that ISM Services PMI increased from 53.6 in April to 54.5 in May, compared to analyst forecast of 53.8. Numbers above 50 show expansion.

Currently, U.S. Dollar Index is trying to settle above the 99.50 level. In case this attempt is successful, U.S. Dollar Index will head towards the nearest resistance level, 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 oil prices. WTI oil rallied towards the $96.00 level, while Brent oil tested the $98.00 level. Rising oil prices reduced demand for risk assets, which was bearish for the European currency.

EUR/USD settled below the 50 MA at 1.1633 and is trying to settle below the support at 1.1585 – 1.1600. In case this attempt is successful, EUR/USD will move towards the next support level, which is located in the 1.1500 – 1.1515 range.

GBP/USD Pulls Back As Oil Prices Rise

GBP/USD is moving lower amid falling appetite for risk. Traders are worried that oil prices will hurt global economic growth and push inflation higher. In this scenario, they choose the safety of the American currency.

GBP/USD is moving towards the 1.3400 level. If GBP/USD manages to settle below 1.3400, it will head towards the support level, which is located in the 1.3335 – 1.3350 range. RSI remains in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

USD/CAD Gains Ground Amid Falling Demand For Commodity-Related Currencies

USD/CAD tests new highs as traders react to the strong pullback in precious metals markets. Gold declined below the $4450 level, while silver moved towards $73.00. From a big picture point of view, traders are worried that high oil prices will reduce demand for commodities. Other commodity-related currencies are also moving lower in today’s trading session.

From the technical point of view, USD/CAD attempts to settle above the resistance at 1.3860 – 1.3875. In case USD/CAD stays above the 1.3875 level, it will move towards the next resistance at 1.3950 – 1.3965.

USD/JPY Tests The 160.00 Level As Traders Focus On Ueda’s Comments

USD/JPY is trying to settle above the key 160.00 level as traders focus on rising Treasury yields. The yield of 2-year Treasuries climbed above the 4.08% level, while the yield of 10-year Treasuries settled near 4.50%.

There are no signs of interventions from the Bank of Japan. Today, Bank of Japan Governor Ueda said that the Bank would discuss potential rate hikes in case inflationary risks exceed risks to the economy. The market believes that BoJ will remain dovish as Japan’s economy is under strong pressure due to high oil prices.

A move above the 160.00 level will open the way to the test of the resistance, which is located in the 161.50 – 162.00 range. A move above the 162.00 level will signal that the situation is out of control and BoJ is not ready to defend the yen.

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