U.S. Dollar Pulls Back From Multi-Week Highs
U.S. Dollar Index is losing ground as traders take some profits off the table after the strong rally and focus on housing market data.
Housing Starts declined by -2.6% month-over-month in August, compared to analyst forecast of +9.0%. Building Permits pulled back by -2.7%, while analysts expected that they would decline by -1.6%. Pending Home Sales increased by +0.3%, missing the analyst forecast of +2%. The reports showed that high interest rates put material pressure on the housing market.
Traders also had a chance to take a look at the Initial Jobless Claims report. The report indicated that 196,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 208,000. The job market stays strong, which is bullish for the American currency.
In case U.S. Dollar Index stays above the psychologically important 100.00 level, it will head towards the nearest resistance, which is located in the 100.50 – 100.65 range. On the support side, a move below the 99.85 level will open the way to the test of the support at 99.25 – 99.40.
EUR/USD Attempts To Rebound
EUR/USD is trying to rebound after sell-off, which was triggered by hawkish comments from Fed Chair Warsh. It remains to be seen whether EUR/USD will be able to gain additional upside momentum in the near term as Fed policy outlook has changed after yesterday’s meeting.
The nearest resistance level for EUR/USD is located in the 1.1500 – 1.1515 range. If EUR/USD climbs above the 1.1515 level, it will move towards the 50 MA at 1.1577.
EUR/USD Price Forecast
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See all EUR/USD forecastsGBP/USD Tests New Lows As BoE Leaves Rates Unchanged
GBP/USD remains under pressure as traders react to BoE Interest Rate Decision. The Bank of England left the interest rate unchanged, in line with analyst estimates. Six members voted to keep rates unchanged, while three members voted for a hike.
Currently, GBP/USD is trying to settle below the 1.3350 level. In case this attempt is successful, GBP/USD will head towards the next support level, which is located in the 1.3285 – 1.3300 range.
USD/CAD Tests Resistance At 1.3985 – 1.4000
USD/CAD gains ground despite the strong rally in precious metals markets. Other commodity-related currencies are moving higher in today’s trading session.
USD/CAD attempts to settle above the resistance level at 1.3985 – 1.4000. If USD/CAD manages to settle above the 1.4000 level, it will head towards the next resistance at 1.4065 – 1.4080. I’d note that RSI is in the overbought territory, so the risks of a pullback are increasing.
USD/JPY Pulls Back Amid Falling Treasury Yields
USD/JPY moved lower as traders focused on the pullback in Treasury yields. The yield of 2-year Treasuries declined towards the 4.68% level, while the yield of 10-year Treasuries settled near 4.95%. Treasury yields moved lower as bond markets calmed down after hawkish comments from Fed Chair Warsh. Fed proved its independence, and traders bet that it will continue to fight inflation.
In case USD/JPY declines below the 155.00 level, it will head towards the 50 MA at 154.44. A move below the 50 MA will open the way to the test of the support at 152.50 – 153.00.
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