U.S. Dollar Moves Higher As Geopolitical Risks Rise: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Moves Higher Amid Rising Demand For Safe-Haven Assets

U.S. Dollar Index gains ground as traders focus on geopolitical risks and react to economic reports.

Oil prices test new highs as an oil tanker was hit near Iraq. Traders bet that the conflict will continue and that it could spread across the Middle East. Demand for safe-haven assets increased, which was bullish for the American currency.

Today, traders also focused on the Initial Jobless Claims report. The report indicated that 213,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 215,000.

Treasury yields are moving higher as traders bet that high oil prices will force the Fed to be more hawkish due to inflation. Rising Treasury yields provided additional support to the U.S. dollar.

Currently, U.S. Dollar Index is trying to settle above the 99.30 level. In case this attempt is successful, U.S. Dollar Index will move towards the nearest resistance, which is located in the 99.70 – 99.85 range.

EUR/USD Retreats As Oil Prices Test New Highs

EUR/USD is losing ground as traders focus on the disappointing Euro Area Retail Sales report. The report indicated that Euro Area Retail Sales declined by -0.1% month-over-month in January, compared to analyst forecast of +0.3%.

Traders also focus on rising oil prices, which will put significant pressure on the European economy.

EUR/USD attempts to settle below the support at 1.1585 – 1.1600. If EUR/USD manages to settle below the 1.1585 level, it will head towards the next support, which is located in the 1.1500 – 1.1515 range.

GBP/USD Tests Support At 1.3315 – 1.3330

GBP/USD remains under pressure as traders focus on the weak UK Construction PMI report. The report showed that Construction PMI declined from 46.4 to 44.5, compared to analyst consensus of 47.

From the technical point of view, GBP/USD attempts to settle below the support level at 1.3315 – 1.3330. If GBP/USD declines below the 1.3315 level, it will move towards the next support at 1.3235 – 1.3250. RSI is in the moderate territory, so there is plenty of room to gain momentum in the near term.

USD/CAD Rebounds As Precious Metals Markets Pull Back

USD/CAD gained ground as traders ignored the rally in the oil markets and focused on the strong pullback in precious metals markets.

Other commodity-related currencies are losing ground in today’s trading session as traders rush to the safety of the U.S. dollar.

If USD/CAD stays above the 1.3700 level, it will get to the test of the nearest resistance, which is located in the 1.3725 – 1.3740 range.

USD/JPY Is Heading Towards The 158.00 Level

USD/JPY is moving higher as traders bet that high energy prices will put significant pressure on the Japanese economy. As a result, BoJ will be forced to keep rates unchanged despite inflation.

The nearest resistance level for USD/JPY is located in the 158.00 – 158.50 range. A move above the 158.50 level will push USD/JPY towards the next resistance at 161.50 – 162.00.

The key question is whether BoJ is ready to defend the yen in case USD/JPY climbs above the resistance at 158.00 – 158.50. The BoJ may decide to wait amid geopolitical uncertainty. In case BoJ does not act, traders will put more pressure on the Japanese yen.

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