U.S. Dollar Moves Higher As Traders Bet On Hawkish Fed: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Gains Ground Ahead Of The Weekend

U.S. Dollar Index gains ground despite the weaker-than-expected Michigan Consumer Sentiment report. The report indicated that Consumer Sentiment declined from 49.8  in April to 44.8 in May, compared to analyst forecast of 48.2.

Year-ahead inflation expectations increased from 4.7% in April to 4.8% in May, while long-run inflation expectations jumped from 3.5% to 3.9%. According to the report, consumers are worried that inflation will increase beyond fuel prices.

The yield of 2-year Treasuries climbed above the 4.13% level as traders bet on hawkish Fed. Rising Treasury yields provided additional support to the American currency.

U.S. Dollar Index remains stuck below the 99.50 level. In case U.S. Dollar Index moves above 99.50, it will head towards the resistance at 99.70 – 99.85.

EUR/USD Remains Stuck Near The 1.1600 Level

EUR/USD moved lower as traders focused on economic reports from Germany. GfK Consumer Confidence decreased from -33.1 in May to -29.8 in June, compared to analyst forecast of -34. Ifo Business Climate improved from 84.5 in April to 84.9 in May, while analysts expected that it would drop to 84.2.

EUR/USD remains stuck near the support level at 1.1585 – 1.1600. In case EUR/USD declines below the 1.1585 level, it will head towards the support level, which is located in the 1.1500 – 1.1515 range.

GBP/USD Is Swinging Between Gains And Losses As Traders React To UK Retail Sales Report

GBP/USD is mostly flat as traders focus on UK Retail Sales data. Retail Sales declined by -1.3% month-over-month in April, compared to analyst forecast of -0.6%.

Today, traders also had a chance to take a look at the UK Consumer Confidence report for May. The report showed that Consumer Confidence improved from -25 to -23, while analysts expected that it would drop to -28.

A move above the resistance level at 1.3450 – 1.3465 will open the way to the test of the next resistance level, which is located in the 1.3535 – 1.3550 range.

USD/CAD Tests New Highs As Precious Metals Pull Back

USD/CAD is moving higher as traders focus on the pullback in precious metals markets. Other commodity-related currencies are also moving lower in today’s trading session.

Interestingly, the pullback in the oil markets did not provide support to commodity-related currencies. From a big picture point of view, traders are worried that high energy prices will hurt global economic growth and reduce demand for commodities.

In this light, falling oil prices could have provided support to the Canadian dollar. Most likely, traders remained cautious as they followed conflicting reports about the current state of U.S. – Iran negotiations.

If USD/CAD stays above the resistance at 1.3775 – 1.3790, it will move towards the next resistance level, which is located in the 1.3860 – 1.3875 range.

USD/JPY Gains Ground As Japan’s Inflation Rate Drops To 1.4%

USD/JPY is slowly moving higher as traders focus on rising Treasury yields. Traders are cautious due to risk of interventions from the Bank of Japan.

Today, traders also focused on inflation data from Japan. Inflaiton Rate decreased from 1.5% in March to 1.4% in April, compared to analyst consensus of 1.8%. Core Inflation Rate declined from 1.8% to 1.4%, while analysts expected that it would drop to 1.7%.

A move above the 159.50 level will push USD/JPY towards the important 160.00 level. In case USD/JPY settles above 160.00, it will head towards the resistance at 161.50 – 162.00.

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