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

U.S. Dollar Moves Higher As Traders Wait For Fed Interest Rate Decision

U.S. Dollar Index gains ground as traders prepare for Fed Interest Rate Decision, which will be released soon.

Analysts expect that Fed will leave the federal funds rate unchanged. Interestingly, FedWatch Tool indicates that there is a 33.7% chance for a rate hike. As usual, forex traders are cautious ahead of the key event of the week.

U.S. Dollar Index failed to settle below the support level at 101.15 – 101.30 and rebounded towards the 101.50 level. In case U.S. Dollar Index manages to settle above 101.50, it will head towards the nearest resistance level, which is located in the 101.80 – 101.95 range.

EUR/USD Pulls Back Amid Rally In The Oil Markets

EUR/USD is losing ground as traders react to the strong rally in the oil markets. Oil prices are up by more than 7% as Iran attacked a U.S. base in Jordan. High oil prices will put additional pressure on the European economy and may force the Fed to be more hawkish, which is bearish for the European currency.

The nearest support level for EUR/USD is located in the 1.1350 – 1.1365 range. A successful test of this level will push EUR/USD towards the next support at 1.1285 – 1.1300. RSI is in the moderate territory, so there is plenty of room to gain additional momentum in case the right catalysts emerge.

GBP/USD Retreats Ahead Of Fed Decision

GBP/USD is moving lower as traders wait for Fed decision and focus on the rally in the oil markets. Traders are not ready for big moves ahead of Fed’s announcement.

In case GBP/USD settles below the 1.3280 level, it will head towards the support at 1.3250 – 1.3265. A move below the 1.3250 level will push GBP/USD towards the next support level at 1.3170 – 1.3185.

USD/CAD Pulls Back Despite Falling Demand For Commodity-Related Currencies

USD/CAD is losing some ground despite the pullback in precious metals. Other commodity-related currencies have found themselves under pressure in today’s trading session.

If USD/CAD declines below the 50 MA at 1.4081, it will head towards the nearest support level, which is located in the 1.4010 – 1.4025 range. On the upside, a move above the resistance level at 1.4125 – 1.4140 will open the way to the test of the next resistance at 1.4235 – 1.4250.

USD/JPY Looks Ready To Test The 164.00 Level

USD/JPY continues its attempts to settle above the key resistance level as traders react to rising Treasury yields. The yield of 2-year Treasuries climbed above the 4.33% level, while the yield of 10-year Treasuries settled near 4.65%. Traders should note that USD/JPY will be extremely sensitive to Fed decision and comments from Fed Chair Warsh.

In case USD/JPY manages to settle above the 164.00 level, it will gain additional upside momentum and head towards the 165.00 level. USD/JPY has not tested the 165.00 level since 1986. It remains to be seen whether Bank of Japan would try to defend the yen as the Japanese currency is fundamentally weak and any attempts to break the current trend may waste reserves.

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