U.S. Dollar Moves Lower As Traders Focus On Tariff Policy: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Moves Lower At The Start Of The Week

U.S. Dollar Index pulled back as traders focused on economic reports and reacted to the recent decision of the Supreme Court. Most likely, tariff issues will remain the key driver for the forex market this week.

Factory Orders decreased by -0.7% month-over-month in December, compared to analyst forecast of -0.5%.

Dallas Fed Manufacturing Index improved from -1.2 in January to +0.2 in February, compared to analyst consensus of -3.5. Production index was mostly unchanged at 12.5, indicating an above-average pace of expansion.

U.S. Dollar Index is stuck between the support at 97.10 – 97.25 and the resistance at 98.00 – 98.15. In case U.S. Dollar Index climbs above the 98.15 level, it will move towards the next resistance level, which is located in the 98.90 – 99.05 range.

EUR/USD Gains Ground As Germany’s Ifo Business Climate Report Beats Estimates

EUR/USD gained some ground as traders focused on the better-than-expected Ifo Business Climate report from Germany. The report indicated that Ifo Business Climate increased from 87.6 in January to 88.6 in February, compared to analyst forecast of 88.4.

EUR/USD needs to settle above the resistance at 1.1835 – 1.1850 to gain additional upside momentum in the near term. On the support side, a move below the support at 1.1770 – 1.1785 will open the way to the test of the next support at 1.1670 – 1.1685.

GBP/USD Tests Support At 1.3485 – 1.3500

GBP/USD attempts to settle back below the support at 1.3485 – 1.3500 as traders evaluate the potential impact of the Supreme Court decision on Trump’s tariffs.

President Trump has already warned that countries that would “play games” will face higher tariffs. From a big picture point of view, traders worry that the Supreme Court decision will lead to a new round of trade wars as Trump will try to protect his tariff policy.

In case GBP/USD declines below the support at 1.3485 – 1.3500, it will head towards the next support level, which is located in the 1.3400 – 1.3415 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

USD/CAD Attempts To Settle Above 1.3700

USD/CAD is moving higher as traders ignore the strong rally in gold markets, which is driven by trade war uncertainty. Other commodity-related currencies have also moved lower in today’s trading session.

If USD/CAD climbs above the 1.3700 level, it will move towards the nearest resistance at 1.3725 – 1.3740. A move above 1.3740 will push USD/CAD towards the next resistance level at 1.3835 – 1.3850.

USD/JPY Retreats Amid Falling Treasury Yields

USD/JPY moved lower as traders focused on the pullback in Treasury yields. The yield of 2-year Treasuries pulled back towards the 3.45% level, while the yield of 10-year Treasuries moved below 4.05%.

The Japanese yen is trying to stabilize after recent volatility, but it remains to be seen whether USD/JPY is ready to calm down amid tariff issues.

Traders are worried that BoJ will intervene in case USD/JPY moves towards the 158.00 level. At the same time, traders are not ready to boost their long positions in the yen due to the weakness of the Japanese economy and dovish BoJ policy outlook.

As a result, USD/JPY is moving back and forth in a wide trading range. In case USD/JPY settles back below the 154.00 level, it will head towards the key support level at 151.50 – 152.00.

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