U.S. Dollar Gains Some Ground As Oil Markets Rally: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Index Tests Resistance At 98.00 – 98.15 As Oil Prices Rise

U.S. Dollar Index gained some ground as traders focused on rising oil prices and reacted to the Existing Home Sales report.

The report indicated that Existing Home Sales increased by +0.2% month-over-month in April, compared to analyst forecast of +2.1%.

Oil prices were up by 4% after President Trump rejected Iran’s response to the U.S. proposal to end the war. Trump added that U.S. – Iran ceasefire was on “massive life support”, providing additional support to oil markets. Rising oil prices boosted demand for safe-haven assets, which was bullish for the American currency.

The technical picture remains unchanged as U.S. Dollar Index failed to settle above the resistance at 98.00 – 98.15. In case U.S. Dollar Index manages to settle above the 98.15 level, it will move towards the next resistance at 98.85 – 99.00.

EUR/USD Moves Higher As Traders Bet On Hawkish ECB

EUR/USD continued its attempts to settle above the resistance at 1.1765 – 1.1780 despite rising oil prices. Traders bet that ECB will be forced to raise rates at the next meeting.

If EUR/USD climbs above the 1.1780 level, it will head towards the next resistance at 1.1850 – 1.1865. On the support side, a move below the 1.1765 level will push EUR/USD towards the 50 MA at 1.1728.

GBP/USD Tests Resistance At 1.3650 – 1.3665

GBP/USD is moving higher as traders stay focused on the political situation in the UK. Prime Minister Keir Starmer remains under pressure after disappointing results of local elections.

UK government bond yields gained upside momentum as traders bet that a potential leadership change will increase the country’s debt. A potential replacement of Starmer would likely be a left-leaning candidate who would boost government spending to win voters.

Currently, GBP/USD is trying to settle above the resistance at 1.3650 – 1.3665. In case this attempt is successful, GBP/USD will head towards the next resistance, which is located in the 1.3730 – 1.3745 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

USD/CAD Stays Range Bound As Traders Ignore The Rally In Silver Markets

USD/CAD is swinging between gains and losses despite the strong rally in silver markets. Other commodity-related currencies are moving higher in today’s trading session.

The nearest resistance level for USD/CAD is located in the 1.3700 – 1.3715 range. A move above the 1.3715 level will open the way to the test of the next resistance at 1.3775 – 1.3790.

USD/JPY Tests The 157.00 Level As Treasury Yields Rise

USD/JPY gained ground as traders ignored intervention risks and focused on rising Treasury yields. The yield of 2-year Treasuries climbed above the 3.92% level, while the yield of 10-year Treasuries settled near 4.40%.

The Bank of Japan has intervened two times in two weeks, but USD/JPY stays above the 155.00 level. The yen remains fundamentally weak due to the difference in interest rates between U.S. and Japan. The weakness of the Japanese economy, which is hurt by high oil prices, serves as another important bearish catalyst for the yen.

In case USD/JPY climbs above the 50 MA at 157.26, it will head towards the resistance level at 158.00 – 158.50. Traders should note that BoJ cannot intervene on a weekly basis as the yen will lose the status of a free-floating currency.

If you’d like to know more about how to trade forex, please visit our educational area.