U.S. Dollar Rallies As Demand For Safe-Haven Assets Grows

Key Insights

• U.S. dollar continues to rebound against a broad basket of currencies as traders focus on the problems with coronavirus in China.
• EUR/USD pulled back towards the 1.0250 level. 
• Commodity-related currencies have found themselves under strong pressure amid a broad sell-off in commodity markets. 

U.S. Dollar Starts The Week On A Strong Note

U.S. Dollar Index gained upside momentum and moved above the 107.50 level as traders reacted to the return of strict COVID curbs in China.

Previously, markets hoped that China would slowly relax its anti-coronavirus policy, boosting growth and providing support to riskier assets.

However, the rapid increase in the number of coronavirus cases in China leaves little hope for any relaxation of the curbs anytime soon, which is bullish for the U.S. dollar.

EUR/USD Declined Towards 1.0250

EUR/USD is currently trying to settle below the 1.0250 level as traders continue to move out of the European currency after the recent rally.

If EUR/USD manages to settle below 1.0250, it will head towards the next support level, which is located at 1.0220. A successful test of the support at 1.0220 will open the way to the test of the support level at 1.0190.

On the upside, the nearest resistance level for EUR/USD is located at 1.0275. In case EUR/USD manages to settle above 1.0275, it will head towards the next resistance at 1.0300. A move above 1.0300 will push EUR/USD towards the resistance at 1.0325.

GBP/USD Is Losing Ground At The Start Of The Week

GBP/USD pulled back towards the 1.1800 level as traders focused on the general strength of the U.S. dollar.

Treasury yields have been moving lower today, but traders ignored this move and remained focused on the situation in China.

The nearest support level for GBP/USD is located at 1.1790. In case GBP/USD declines below this level, it will move towards the next support level at 1.1760.

AUD/USD Retreats Amid A Strong Sell-Off In Commodity Markets

AUD/USD is testing the 0.6600 level as commodity markets pull back at the start of the week. The strong sell-offs in the oil and palladium markets have hurt the commodity market sentiment.

Other commodity-related currencies are also moving lower. NZD/USD is currently trying to settle below the 0.6100 level. USD/CAD has recently managed to get above the 50 EMA at 1.3450.

USD/JPY Tested The 142 Level

USD/JPY managed to get above the key resistance at 140.60 and made an attempt to settle above the 142 level.

The yen remains fundamentally weak due to the ultra-dovish policy of the BoJ, so it’s not surprising to see that USD/JPY rallied when the U.S. dollar started to rebound against a broad basket of currencies.

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