U.S. Dollar Moves Higher Ahead Of Fed Decision: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Gains Ground As Traders Wait For Fed Decision

U.S. Dollar Index gains ground as traders focus on the upcoming Fed Interest Rate Decision and react to the strong rally in the oil markets.

Fed is expected to leave the rate unchanged at 3.75%. It should be noted that Fed will also issue FOMC Economic Projections, which may have a significant impact on forex markets.

Brent oil rallied towards the $108.00 level as Israel delivered strikes against an Iranian gas field. Iran said that it would attack energy facilities in the Gulf.

Traders also focused on the Producer Prices report for February. PPI increased by +0.7% on a month-over-month basis, compared to analyst forecast of +0.3%. Core PPI grew by +0.5%, while analysts expected that it would increase by +0.3%.

It looks that Fed’s comments could be hawkish due to rising oil prices and the higher-than-expected Producer Prices data. If Powell is hawkish, U.S. dollar will get more support.

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

EUR/USD Pulls Back As Oil Markets Rally

EUR/USD pulled back as traders prepared for Fed decision and worried about the rally in the oil markets.

In case EUR/USD settles below the 1.1500 level, it will head towards the nearest support, which is located in the 1.1450 – 1.1465 range.

On the upside, a move above the 1.1525 level will open the way to the test of the resistance level at 1.1585 – 1.1600.

GBP/USD Retreats As Traders Bet On Hawkish Fed

GBP/USD moved lower as traders focused on the higher-than-expected U.S. PPI report and waited for Fed Interest Rate Decision.

The strong rally in the oil markets presents a serious problem for the Fed as high energy prices will trigger inflation. Nobody can predict the duration of the conflict in the Middle East, so Fed will have to move carefully.

If GBP/USD settles below the 1.3300 level, it will head towards the nearest support level at 1.3250 – 1.3265.

USD/CAD Stays Range-Bound As BoC Keeps Rates Unchanged

USD/CAD is mostly flat as traders react to BoC Interest Rate Decision. The Bank of Canada left the interest rate unchanged at 2.25%, in line with analyst expectations.

The technical picture remains unchanged as USD/CAD is stuck between the support level at 1.3650 – 1.3665 and the resistance at 1.3720 – 1.3735.

If USD/CAD manages to settle above the 1.3735 level, it will move towards the next resistance, which is located in the 1.3735 range.

USD/JPY Gains Ground As Treasury Yields Rise

USD/JPY gains ground as traders react to rising Treasury yields and focus on the strong rally in the oil markets.

Traders also prepare for central bank decisions. BoJ will release its interest rate decision tomorrow. Analysts expect that BoJ will keep the rate unchanged at 0.75%.

USD/JPY will be sensitive to comments from Fed Chair Powell and BoJ Governor Ueda. High oil prices may force the BoJ to keep rates at low levels despite inflation as Japan’s economy is dependent on energy imports.

Currently, USD/JPY is trying to settle back above the 159.50 level. In case this attempt is successful, USD/JPY will head towards the next resistance level at 161.50 – 162.00.

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