U.S. Dollar Gains Ground As PPI Report Highlights Inflationary Pressure: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Moves Higher As Traders Focus On Producer Prices Data

U.S. Dollar Index gains ground as traders focus on the strong rally in the oil markets and react to Producer Prices data.

Brent oil rallied above the $107.00 level amid rising tensions in the Middle East. Houthis achieved victory against forces of Yemen’s official government, taking control of a key port on the Red Sea. At this point, Houthis have the ability to control shipping in the Bab el-Mandeb Strait.

PPI increased by +0.4% month-over-month in August, in line with analyst estimates. The previous report was revised from 0% to +0.1%.  Core PPI grew by +0.2%, while analysts expected that it would increase by +0.3%. The previous report was revised from +0.2% to +0.3%. Due to revisions, PPI was higher than expected, which was bullish for U.S. dollar.

If U.S. Dollar Index manages to settle above the 99.00 level, it will head towards the resistance level, which is located in the 99.25 – 99.40 range.

EUR/USD Pulls Back As ECB Raises Rates

EUR/USD is losing ground as traders focus on the ECB Interest Rate Decision. The European Central Bank raised the rate from 2.4% to 2.65%, in line with analyst estimates.

ECB President Christine Lagarde said that the hike was “a no brainer”. ECB noted that the conflict in the Middle East generated inflationary pressure. In my opinion, ECB may raise rates at the next meeting due to the situation in the oil markets.

Currently, EUR/USD is trying to settle below the support level at 1.1600 – 1.1615. In case this attempt is successful, EUR/USD will head towards the next support, which is located in the 1.1500 – 1.1515 range.

GBP/USD Retreats As Oil Markets Rally

GBP/USD pulled back as demand for U.S. dollar increased amid strong rally in the oil markets. Traders bet that Fed will raise the federal funds rate next week.

If GBP/USD stays below the 50 MA at 1.3527, it will head towards the nearest support level, which is located in the 1.3470 – 1.3485 range. RSI is in the moderate territory, so there is plenty of room to gain additional downside momentum in the near term.

USD/CAD Moves Higher As Traders React To The Sell-Off In Precious Metals Markets

USD/CAD gained ground as traders focused on the strong pullback in precious metals markets. Gold is down by -1%, while silver markets pulled back by -4.5%. Other commodity-related currencies are also losing ground in today’s trading session.

Currently, USD/CAD is trying to settle above the resistance level at 1.3825 – 1.3840. In case USD/CAD climbs above the 1.3840 level, it will head towards the next resistance, which is located in the 1.3900 – 1.3915 range.

USD/JPY Gains Ground Amid Rising Treasury Yields

USD/JPY is moving higher as traders bet on hawkish Fed and focus on rising Treasury yields. The yield of 2-year Treasuries settled above the 4.54% level, while the yield of 10-year Treasuries moved above 4.91%.

The nearest resistance level for USD/JPY is located in the 155.00 – 155.50 range. if USD/JPY settles above 155.50, it will head towards the 50 MA at 156.33. A move above the 50 MA will open the way to the test of the next resistance at 158.00 – 158.50.

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