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

U.S. Dollar Tests New Highs As Traders Focus On PPI Data

U.S. Dollar Index gains ground as traders focus on the Producer Prices report. The report indicated that Producer Prices increased by +1.4% month-over-month in April, compared to analyst forecast of +0.5%.  The previous report was revised from +0.5% to +0.7%.

Core PPI grew by +1%, exceeding the analyst consensus of +0.3%. The previous report was revised from +0.1% to +0.2%.

FedWatch Tool indicates that traders believe that the current federal funds rate marks the bottom of the rate-cut cycle. Some traders are ready to bet that Fed will have to raise rates by the end of the year to fight inflation. Bets on hawkish Fed provide support to the U.S. dollar.

Currently, U.S. Dollar Index is trying to settle above the 98.50 level. In case this attempt is successful, U.S. Dollar Index will move towards the nearest resistance level, which is located in the 98.85 – 99.00 range.

EUR/USD Retreats As Euro Area Industrial Production Misses Estimates

EUR/USD pulls back as traders focus on the Euro Area Industrial Production report. The report indicated that Industrial Production increased by +0.2% month-over-month, compared to analyst forecast of +0.3%.

Today, traders also had a chance to take a look at Germany’s Wholesale Prices report. The report showed that Wholesale Prices increased by +2% month-over-month in April, compared to analyst consensus of +2%. On a year-over-year basis, Wholesale Prices grew by +5.2%.

The nearest support level for EUR/USD is located in the 1.1665 – 1.1680 range. in case EUR/USD manages to settle below the 1.1665 level, it will head towards the next support at 1.1585 – 1.1600. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

GBP/USD Tested The 1.3500 Level

GBP/USD moved lower as traders reacted to U.S. Producer Prices data and focused on the political crisis in the UK. According to recent reports, UK Health Secretary Wes Streeting is prepared to challenge Prime Minister Keir Starmer.

In case GBP/USD settles below the 1.3500 level, it will head towards the support at 1.3450 – 1.3465. A move below the 1.3450 level will open the way to the test of the next support at 1.3335 – 1.3350.

USD/CAD Stays Range-Bound

USD/CAD remains stuck near resistance at 1.3700 – 1.3715 as traders monitor the dynamics of oil markets. Oil prices pulled back from session highs and moved into negative territory as traders focused on Trump – Xi meeting in China. Other commodity-related currencies were mixed in today’s trading session.

A successful test of the resistance at 1.3700 – 1.3715 will push USD/CAD towards the next resistance level at 1.3775 – 1.3790. On the support side, a move below the 1.3685 level will open the way to the test of the support at 1.3620 – 1.3635.

USD/JPY Gains Ground As Treasury Yields Rise

USD/JPY is cautiously moving higher as traders bet on hawkish Fed. The yield of 10-year Treasuries moved above the 4.47% level, while the yield of 30-year Treasuries made an attempt to settle above 5.05%.

If USD/JPY climbs above the resistance at 158.00 – 158.50, it will move towards the psychologically important 160.00 level. The key question is whether BoJ is ready to intervene again if USD/JPY tests the 160.00 level. If BoJ does not support the yen, USD/JPY may quickly get to the test of the resistance at 161.50 – 162.00.

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