U.S. Dollar Pulls Back Amid De-Escalation In The Middle East: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Is Losing Some Ground As Durable Goods Orders Miss Estimates

U.S. Dollar Index is losing some ground as traders react to the Durable Goods Orders report. The report indicated that Durable Goods Orders increased by +0.3% month-over-month in June, compared to analyst forecast of +2.5%.

Today, traders also had a chance to take a look at the Dallas Fed Manufacturing Index report for July. The report showed that Dallas Fed Manufacturing Index improved from 0.0 in June to +1.3 in July, compared to analyst consensus of -1.

In case U.S. Dollar Index pulls back below the support at 101.15 – 101.30, it will head towards the 50 MA at 101.02. A move below the 50 MA will push U.S. Dollar Index towards the next support level at 100.50 – 100.65.

EUR/USD Gains Ground As Ifo Business Climate Exceeds Expectations

EUR/USD gained some ground as traders focused on the better-than-expected Ifo Business Climate report from Germany. The report indicated that Business Climate improved from 85.7 (revised from 85.6) in June to 86.6 in July, compared to analyst forecast of 86.

In case EUR/USD settles above the 1.1400 level, it will get to the test of the nearest resistance level, which is located in the 1.1420 – 1.1435 range. On the support side, EUR/USD needs to settle below the 1.1350 level to gain downside momentum in the near term. In this case, EUR/USD will head towards the next support at 1.1270 – 1.1285.

GBP/USD Tests The 1.3300 Level

GBP/USD is losing ground despite the strong sell-off in the oil markets. Oil prices are down by -9% amid signs of de-escalation in the Middle East.

A move below the 1.3300 level will push GBP/USD towards the support level at 1.3250 – 1.3265. RSI is in the moderate territory, so there is plenty of room to gain downside momentum in case the right catalysts emerge.

On the upside, a successful test of the resistance at 1.3335 – 1.3350 will open the way to the test of the 50 MA at 1.3406. If GBP/USD climbs above the 50 MA, it will head towards the resistance level at 1.3450 – 1.3465.

USD/CAD Attempts To Settle Above 1.4100

USD/CAD is moving higher despite rising precious metals markets. Other commodity-related currencies are mixed in today’s trading session.

The nearest resistance level for USD/CAD is located in the 1.4125 – 1.4140 range. A move above the 1.4140 level will push USD/CAD towards the next resistance level at 1.4235 – 1.4250.

USD/JPY Is Stuck Below The 164.00 Level

USD/JPY continues its attempts to settle above the resistance level at 163.50 – 164.00 despite falling Treasury yields. The yield of 2-year Treasuries pulled back towards 4.30%, while the yield of 10-year Treasuries settled below 4.65%. Bond traders reacted to the sell-off in the oil markets.

It should be noted that forex traders remain focused on longer-term Fed policy outlook. The market expects that Fed will start a rate hike cycle to fight inflation, while the Bank of Japan would be forced to stay dovish due to the weakness of the Japanese economy.

If USD/JPY settles above the 164.00 level, it will gain additional upside momentum and move towards the 165.00 level. It remains to be seen whether BoJ is ready to intervene to provide support to the Japanese currency.

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