U.S. Dollar Pulls Back Amid Profit-Taking: 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 is losing grond as traders take some profits off the table after the strong rally.

Today, traders also had a chance to take a look at the NAHB Housing Market Index report. The report indicated that NAHB Housing Market Index increased from 34 in April to 37 in May, compared to analyst forecast of 35. NAHB noted that higher mortgage rates and rising gas prices continued to dampen buyer demand.

The nearest support level for U.S. Dollar Index is located in the 98.85 – 99.00 range. In case U.S. Dollar Index manages to settle below the 98.85 level, it will head towards the 50 MA at 98.41. A move below the 50 MA will open the way to the test of the support at 98.00 – 98.15.

EUR/USD Gains Ground As Traders Bet On A Rebound

EUR/USD rebounds as traders buy the dip. Rising oil prices did not put pressure on the European currency in today’s trading session. Brent oil climbed above the $111 level as traders worried that U.S. could restart the military operation against Iran.

EUR/USD is moving towards the resistance level at 1.1665 – 1.1680. If EUR/USD settles above the 1.1680 level, it will move towards the 50 MA at 1.1718. In case EUR/USD climbs above the 50 MA, it will head towards the next resistance, which is located in the 1.1765 – 1.1780 range.

GBP/USD Attempts To Settle Above 1.3400

GBP/USD rebounds as traders react to the strong pullback in UK government bond yields. The yield of 10-year UK government bonds declined from 5.19% to 5.07% as bond traders reduced their bets on the political turmoil in the country. Prime Minister Keir Starmer said that he would lead Labour into the next general election, rejecting calls to step down.

Currently, GBP/USD is trying to settle above the 1.3400 level. In case this attempt is successful, GBP/USD will head towards the resistance at 1.3450 – 1.3465. A move above the 1.3465 level will push GBP/USD towards the 50 MA at 1.3517.

USD/CAD Is Mostly Flat As Oil Markets Move Higher

USD/CAD is swinging between gains and losses as traders focus on the situation in commodity markets. Gold is mostly flat, while oil markets are up by +1.5% amid rising geopolitical tensions.  Other commodity-related currencies are moving higher in today’s trading session.

If USD/CAD moves above the 1.3750 level, it will head towards the resistance level at 1.3775 – 1.3790. A successful test of this level will open the way to the test of the next resistance at 1.3860 – 1.3875.

USD/JPY Tests The 159.00 Level

USD/JPY gained some ground despite the pullback in Treasury yields. USD/JPY continues to move higher as traders focus on the fundamental weakness of the Japanese currency.

However, traders are worried that the Bank of Japan may intervene again. It should be noted that the yield of Japan’s 10-year government bonds increased from 1.1% at the start of 2025 to 2.75%. This major rally in yields may push Japanese investors to sell their positions overseas and move their money back into the country. In this case, the Japanese currency may get some support.

In case USD/JPY manages to settle above the 159.00 level, it will move towards the psychologically important 160.00 level. If BoJ does not intervene, USD/JPY may quickly get to the test of the resistance level at 161.50 – 162.00.

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