U.S. Dollar Gains Ground As WTI Oil Tests The $95.00 Level: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Index Tests Resistance At 99.70 – 99.85

U.S. Dollar Index continues to move higher as traders bet on hawkish Fed. WTI oil prices rallied towards the $95.00 level as Iran’s Supreme Leader Khamenei said that the Strait of Hormuz would remained closed in his first public remarks.

Traders believe that Fed will be forced to keep rates unchanged to fight inflation, which will be triggered by rising oil prices.

Today, traders also had a chance to take a look at housing market data. Housing Starts increased by +7.2% month-over-month in January, compared to analyst forecast of -2.4%.  Building Permits decreased by -5.4%, while analysts expected that they would decline by -2.4%.

Initial Jobless Claims report showed that 213,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 215,000. The report indicated that the job market remained in decent shape.

Currently, U.S. Dollar Index is trying to settle above the resistance at 99.70 – 99.85. In case this attempt is successful, U.S. Dollar Index will move towards the next resistance level, which is located in the 100.35 – 100.50 range.

EUR/USD Pulls Back As Oil Prices Rise

EUR/USD pulled back as traders focused on the strong rally in the oil markets. High energy prices will put significant pressure on the European economy.

EUR/USD attempts to settle below the support level at 1.1510 – 1.1525. In case EUR/USD manages to settle below the 1.1510 level, it will move towards the next support, which is located in the 1.1450 – 1.1465 range. RSI remains in the moderate territory, so there is enough room to gain additional downside momentum in case the right catalysts emerge.

GBP/USD Retreats As Traders Bet On Hawkish Fed

GBP/USD is also moving lower as traders focus on general strength of the American currency and react to geopolitical developments.

UK has recently said that Iran may have started mining the Strait of Hormuz. In case the Strait of Hormuz remains closed for weeks, oil prices will test new highs, which will be bearish for the British pound.

The nearest support level for GBP/USD is located in the 1.3315 – 1.3330 range. A move below the 1.3315 level will push GBP/USD towards the next support at 1.3250 – 1.3265.

USD/CAD Moves Higher As Traders Ignore The Oil Market Rally

USD/CAD gains ground despite the strong rally in the oil markets. Other commodity-related currencies are also losing ground in today’s trading session.

Traders focus on recent changes in Fed policy outlook, which are bullish for the American currency.

USD/CAD moved above the resistance at 1.3585 – 1.3600 and is trying to settle above the 50 MA at 1.3626. If this attempt is successful, USD/CAD will head towards the resistance at 1.3650 – 1.3665.

USD/JPY Gains Ground As Treasury Yields Rise

USD/JPY tests new highs as traders focus on rising Treasury yields. The yield of 2-year Treasuries climbed above the 3.70% level, while the yield of 10-year Treasuries moved towards the 4.25% level.

Fed is expected to keep rates unchanged in the upcoming months, while BoJ will not be able to raise rates as rising energy prices will hurt Japan’s economy.

From the technical point of view, USD/JPY climbed above the resistance at 158.00 – 158.50 and is trying to settle above the 159.00 level. A move above 159.00 will push USD/JPY towards the resistance at 161.50 – 162.00.

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