U.S. Dollar Gains Ground As Oil Tests New Highs: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY
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Demand for safe-haven dollar increased amid reports indicating Saudi's key pipeline would be shut for several weeks after an attack.
U.S. Dollar Moves Higher As Traders Bet On Hawkish Fed
U.S. Dollar Index gained ground as traders bet that Fed will raise rates due to high oil prices.
FedWatch Tool indicates that there is a 90.1% probability that Fed will raise rates at the meeting on Wednesday.
Brent oil moved above the $107.00 level as reports indicated that Saudi East-West pipeline will not work for several weeks after an attack. I’d note that oil prices pulled back from session highs after President Trump announced that Russia and Ukraine agreed not to attack energy facilities. Russia and Ukraine have not confirmed the existence of such a deal.
In case U.S. Dollar Index stays above the support level at 99.25 – 99.40, it will move towards the resistance level at 99.85 – 100.00. On the support side, a successful test of the support at 99.25 – 99.40 will open the way to the test of the next support, which is located in the 98.60 – 98.75 range.
EUR/USD Pulls Back As Oil Prices Rise
EUR/USD moved lower as traders focused on the rally in the oil markets. Traders worry that high oil prices will put significant pressure on the European economy.
The nearest support level for EUR/USD is located in the 1.1500 – 1.1515 range. If EUR/USD declines below the 1.1500 level, it will head towards the next support at 1.1420 – 1.1435.
GBP/USD Tests Support At 1.3470 – 1.3485
GBP/USD moved lower as traders focused on the strength of the American currency. I’d note that oil’s pullback from session highs provided material support to the British pound, which managed to move away from session lows.
Currently, GBP/USD is trying to settle back above the 1.3500 level. In case this attempt is successful, GBP/USD will move towards the 50 MA at 1.3522. If GBP/USD climbs above the 50 MA, it will head towards the resistance at 1.3550 – 1.3565.
USD/CAD Attempts To Settle Above 1.3900
USD/CAD moved higher as traders focused on inflation data from Canada. Inflation Rate remained unchanged at 3.0% in August, in line with analyst estimates. Core Inflation Rate increased from 2.3% in July to 2.4% in August, while analysts expected that it would remain unchanged at 2.3%.
USD/CAD attempts to settle above the resistance level at 1.3900 – 1.3915. If USD/CAD climbs above the 1.3915 level, it will head towards the next resistance, which is located in the 1.3985 – 1.4000 range. RSI is in the overbought territory, so the risks of a pullback are rising.
USD/JPY Moves Higher As Treasury Yields Rise
USD/JPY gained ground as traders monitored the developments in Treasury markets. The yield of 10-year Treasuries made an attempt to settle above the psychologically important 5.00% level amid inflation worries. Oil’s move away from session highs provided support to bonds, and the yield of 10-year Treasuries pulled back towards the 4.94% level.
The nearest resistance level for USD/JPY is located in the 155.00 – 155.50 range. If USD/JPY climbs above the 155.50 level, it will head towards the next resistance, which is located in the 158.00 – 158.50 range.
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About the Author
Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
