U.S. Dollar Pulls Back As Traders Stay Focused On Profit-Taking: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Remains Under Pressure

U.S. Dollar Index is losing ground as traders react to the Dallas Fed Manufacturing Index report. The report indicated that Dallas Fed Manufacturing Index decreased from 0.4 in May to 0 in June, compared to analyst forecast of 2.

From a big picture point of view, traders continue to take profits after the strong rally.

Currently, U.S. Dollar Index is trying to settle below the support at 101.15 – 101.30. In case this attempt is successful, U.S. Dollar Index will move towards the next support level, which is located in the 100.50 – 100.65 range.

EUR/USD Tests Resistance At 1.1420 – 1.1435

EUR/USD is moving higher as traders react to the better-than-expected Euro Area Economic Sentiment report. The report indicated that Euro Area Economic Sentiment increased from 93.7 (revised from 93.5) in May to 95.0 in June, compared to analyst consensus of 94.3.

EUR/USD attempts to settle above the resistance level at 1.1420 – 1.1435. In case EUR/USD manages to settle above the 1.1435 level, it will head towards the next resistance at 1.1500 – 1.1515. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

GBP/USD Gains Ground As Traders Bet On A Rebound

GBP/USD is moving higher as traders focus on general weakness of the American currency. Interestingly, rising Treasury yields did not provide any support to the U.S. dollar. The yield of 2-year Treasuries climbed above the 4.11% level, while the yield of 10-year Treasuries moved above 4.38%.

From the technical point of view, GBP/USD is trying to settle above the resistance level at 1.3250 – 1.3265. In case GBP/USD settles above the 1.3265 level, it will move towards the next resistance, which is located in the 1.3335 – 1.3350 range.

On the support side, a move below the 50 MA at 1.3222 will push GBP/USD towards the nearest support at 1.3165 – 1.3180.

USD/CAD Moves Higher As Precious Metals Markets Pull Back

USD/CAD gained some ground as traders reacted to the strong pullback in precious metals markets. Gold declined towards the $4000 level, while silver settled near the $58.00 level. Other commodity-related currencies were mixed in today’s trading session.

The nearest resistance level for USD/CAD is located in the 1.4225 – 1.4240 range. This resistance level has already been tested several times and proved its strength. If USD/CAD climbs above the 1.4240 level, it will move towards the next resistance level at 1.4300 – 1.4315.

USD/JPY Tests Four-Decade Lows

USD/JPY continues to move higher despite the better-than-expected Retail Sales report from Japan. The report showed that Retail Sales increased by +5.3% year-over-year in May, compared to analyst consensus of +3.2%.

There are no signs of interventions from the Bank of Japan, but traders remain cautious. Earlier, Japanese Finance Minister Katayama warned that Japan was ready to take action to prevent speculative moves. However, it remains to be seen whether BoJ is ready to defend the yen at current levels.

A move above the 162.00 level may trigger a strong rally in case BoJ does not provide support to the Japanese yen. The Japanese currency has not visited such levels since 1986, so traders are in unchartered territory.

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