U.S. Dollar Tests New Highs As Composite PMI Beats Estimates
U.S. Dollar Index gains ground as traders focus on strong PMI reports. Manufacturing PMI increased from 53.9 in August to 57 in September, compared to analyst forecast of 53.6. Services PMI grew from 56.5 to 58.7, compared to analyst consensus of 56. Numbers above 50 show expansion.
The reports indicated that the growth of the U.S. economy has accelerated. As a result, traders rushed to bet on hawkish Fed. FedWatch Tool indicates that the probability of a rate hike in October has increased to 70.9%.
U.S. Dollar Index settled above the previous resistance level at 100.50 – 100.65 and is trying to settle above the 101.00 level. In case this attempt is successful, U.S. Dollar Index will move towards the next resistance level, which is located in the 101.50 – 101.65 range.
EUR/USD Tests New Lows As Traders Bet On Hawkish Fed
EUR/USD is losing ground despite stronger-than-expected PMI data. Euro Area Composite PMI improved from 52.0 in August to 53.1 in September, while analysts expected that it would decrease to 51.7.
EUR/USD pulled back below the support level at 1.1420 – 1.1435 and moved below the 1.1400 level. If EUR/USD stays below 1.1400, it will head towards the support level at 1.1335 – 1.1350. I’d note that RSI is in the oversold territory, so the risks of a rebound are rising.
GBP/USD Is Under Strong Pressure
GBP/USD remains under pressure as traders focus on the strong rally in the oil markets and focus on hawkish changes in Fed policy outlook. In the UK, Manufacturing PMI increased from 51.7 in August to 52 in September, compared to analyst forecast of 51.5. Services PMI pulled back from 52.5 to 51.7, compared to analyst consensus of 52.
From the technical point of view, GBP/USD declined below the support at 1.3285 – 1.3300 and tested that 1.3250 level. If GBP/USD settles below 1.3250, it will head towards the support level, which is located in the 1.3150 – 1.3165 range.
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See all EUR/USD forecastsUSD/CAD Tests New Highs Amid Falling Demand For Commodity-Related Currencies
USD/CAD gained ground as traders reacted to the strong pullback in precious metals markets. Gold pulled back below the $4300 level, while silver declined by -3.5%. Other commodity-related currencies also found themselves under pressure in today’s trading session.
In case USD/CAD stays above the resistance level at 1.4065 – 1.4080, it will head towards the next resistance level, which is located in the 1.4135 – 1.4150 range.
USD/JPY Gains Ground As Treasury Yields Rise
USD/JPY is moving higher as Treasury yields rise after strong U.S. PMI data. The yield of 2-year Treasuries climbed towards the 4.90% level, while the yield of 10-year Treasuries tested new highs near the 5.10% level.
Rising Treasury yields are bullish for USD/JPY as traders doubt that Bank of Japan will raise rates aggressively at the upcoming meetings.
Currently, USD/JPY is trying to settle above the resistance level at 158.00 – 158.50. In case this attempt is successful, USD/JPY will move towards the next resistance level at 160.00 – 161.50.
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