U.S. Dollar Pulls Back As Oil Prices Drop
U.S. Dollar Index is losing ground despite the better-than-expected ISM Manufacturing PMI report. The report indicated that ISM Manufacturing PMI improved from 54.5 in September to 55.5 in October, compared to analyst forecast of 54.6. Numbers above 50 show expansion.
The report did not provide support to the American currency as traders reacted to the strong pullback in the oil markets. Oil prices are down by -6% as Iran’s Supreme Leader Khamenei authorized the country’s government to negotiate a peace deal. Falling oil prices reduced demand for safe-haven assets, which was bearish for the American currency.
Currently, U.S Dollar Index is trying to settle below the support level at 101.50 – 101.65. In case U.S. Dollar Index manages to settle below the 101.50 level, it will head towards the next support, which is located in the 100.70 – 100.85 range.
EUR/USD Moves Higher As Traders Ignore Germany’s Retail Sales Data
EUR/USD gains ground as traders ignore the weak Retail Sales report from Germany and focus on falling oil prices. Germany’s Retail Sales declined by -2.0% month-over-month in September, compared to analyst consensus of +0.4%.
In case EUR/USD manages to settle above the 1.1225 level, it will head towards the resistance level at 1.1250 – 1.1265. On the support side, a successul test of the support at 1.1175 – 1.1190 will open the way to the test of the next support level at 1.1100 – 1.1115.
GBP/USD Tests New Highs Amid Falling Oil Prices
GBP/USD is moving higher, supported by the strong sell-off in the oil markets. The potential peace deal between U.S. and Iran may provide additional support to the British pound.
GBP/USD climbed above the resistance at 1.3385 – 1.3400 and is trying to settle above the 1.3430 level. If GBP/USD settles above 1.3430, it will head towards the resistance, which is located in the 1.3485 – 1.3500 range.
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See all EUR/USD forecastsUSD/CAD Tests Resistance At 1.3985 – 1.4000
USD/CAD gained some ground as traders focused on the disappointing Manufacturing PMI report from Canada. The report showed that Manufacturing PMI declined from 51.5 in September to 49.6 in October, compared to analyst forecast of 51. Numbers below 50 show contraction. Interestingly, rising precious metals markets did not provide support to the Canadian dollar today. Other commodity-related currencies were mixed in today’s trading session.
The nearest resistance level for USD/CAD is located in the 1.3985 – 1.4000 range. A move above the 1.4000 level will push USD/CAD towards the next resistance at 1.4070 – 1.4085.
USD/JPY Gains Ground Despite Falling Treasury Yields
USD/JPY moved higher despite the pullback in Treasury yields. The yield of 2-year Treasuries declined towards the 4.58% level, while the yield of 10-year Treasuries settled below 4.90%.
USD/JPY needs to settle above the resistance at 158.00 – 158.50 to have a chance to gain upside momentum in the near term. In this case, USD/JPY will head towards the next resistance, which is located in the 160.00 – 160.50 range. It remains to be seen whether BoJ is ready to provide support to the yen if USD/JPY tests the 160.00 level, but traders are worried about this scenario.
On the support side, a move below the 50 MA at 157.52 will push USD/JPY towards the 157.00 level. In case USD/JPY declines below 157.00, it will head towards recent lows near the 156.00 level.
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