U.S. Dollar Gains Ground As Treasury Yields Rebound

Key Insights

• The surprising ISM Non-Manufacturing PMI report had a significant impact on currency dynamics. 
• Traders rushed to buy the U.S. dollar as Treasury yields moved higher. 
• EUR/USD and GBP/USD pulled back after testing new highs. 

U.S. Dollar Rallies As ISM Services PMI Exceeds Expectations

U.S. dollar gained upside momentum after the release of the better-than-expected ISM Non-Manufacturing PMI report.

The U.S. Dollar Index managed to get above the 105 level as Treasury yields moved higher. Traders were ready to bet on a more aggressive Fed after the surprising Services PMI data.

EUR/USD Pulls Back After An Unsuccessful Attempt To Settle Above 1.0600

EUR/USD made an attempt to settle above the 1.0600 level but lost momentum and moved towards the 1.0500 level.

Today, traders had a chance to take a look at the final reading of the Euro Area Services PMI report. The report indicated that Euro Area Services PMi declined from 48.6 in October to 48.5 in November, compared to analyst consensus of 48.6.

Euro Area Retail Sales declined by 1.8% month-over-month in October, compared to analyst consensus of -1.7%. Interestingly, the report did not put pressure on the euro, which gained downside momentum after the release of the U.S. ISM Services PMI data.

GBP/USD Declined Below 1.2200

GBP/USD has recently moved below the 1.2200 level and is trying to gain additional downside momentum.

In the UK, the final reading of the Services PMI report indicated that Services PMI remained unchanged at 48.8 in November, in line with the analyst consensus. Most likely, traders will stay focused on the dynamics of Treasury yields and general risk appetite in the near term.

AUD/USD Retreats As Commodity Markets Pull Back

AUD/USD  declined towards the 0.6725 level amid a broad pullback in commodity markets. NZD/USD has also found itself under significant pressure and moved closer to the 0.6300 level.

Meanwhile, USD/CAD managed to get to the test of the 1.3550 level.

In case USD/CAD manages to settle above the resistance at 1.3550, it will head towards the next resistance level at 1.3600. A move above this level will open the way to the test of the resistance at 1.3640.

On the support side, a move below 1.3550 will push USD/CAD towards the support at 1.3520. If USD/CAD declines below this level, it will head towards the support at 1.3500. A successful test of this support will open the way to the test of the next support level at 1.3470.

USD/JPY Tests Resistance At 136.50

USD/JPY gained strong upside momentum and moved towards the 136.50 level as traders focused on the general dynamics of the U.S. dollar. From a big picture point of view, USD/JPY is trying to get to the test of the important resistance level at 137.50.

For a look at all of today’s economic events, check out our economic calendar.