U.S. Dollar Rebounds Modestly on Legislative Progress: Analysis for EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Recovers Modestly, but Technical Trends Remain Divergent Across Majors

The U.S. dollar regained ground Thursday following three days of losses, lifted modestly by the House’s passage of President Trump’s expansive tax and spending bill. Despite this, sentiment toward the greenback remains cautious, weighed by concerns over the U.S. fiscal outlook and bond market instability. The dollar index (DXY) rebounded slightly but remains under its trend-defining moving average, reflecting ongoing pressure in the broader dollar complex.

DXY – Trend Lower as Fiscal Concerns Dominate

The dollar index (DXY) trades below its moving average, confirming the broader downtrend. Support is found at 99.33 and 98.94, while resistance comes in at 100.32 and 100.48.

Despite a slight recovery, the dollar remains pressured by structural concerns. Trump’s tax bill, estimated to add nearly $4 trillion to U.S. debt, has rattled bond markets. A weak 20-year auction further dampened sentiment, reinforcing investor caution around dollar exposure.

EUR/USD – Supported by Structure, Fundamentals Mixed

EUR/USD is trading above its moving average, confirming an upward trend. Technically, the pair is supported at 1.1235 and 1.1222, while resistance is defined at 1.1328 and 1.1374.

Fundamentally, the euro faced headwinds after euro zone PMIs revealed a contraction in business activity. However, the pair remains supported as the dollar struggles to attract buying interest amid weak demand in Treasury auctions and growing concerns about the U.S. debt trajectory.

GBP/USD – Trend Up, Pound Anchored by Sticky Inflation

GBP/USD remains above its moving average, sustaining an uptrend. Key support sits at 1.3346 and 1.3327, with resistance at 1.3478 and 1.3536.

UK inflation data continues to come in hot, reducing the likelihood of near-term rate cuts from the Bank of England. This has helped the pound maintain strength against the dollar, which remains hindered by market unease over Trump’s budget bill and credit downgrade risks.

USD/CAD – Bearish Trend with Fiscal Contrast Driving Flows

USD/CAD is trading below its moving average, confirming a downtrend. Support is found at 1.3824 and 1.3760, while resistance levels are 1.3885 and 1.3929.

The Canadian dollar is underpinned by stable oil prices and a more favorable fiscal backdrop compared to the U.S. Traders are increasingly cautious about holding dollars as long-term deficit fears and soft demand at bond auctions persist.

USD/JPY – Under Pressure, Recovery Capped by Resistance

USD/JPY remains below its moving average, indicating a downward trend. Support zones lie at 143.03 and 142.80, with resistance marked at 145.50 and 146.60.

Although U.S. yields have steadied, USD/JPY has failed to reclaim key technical levels. Market participants are also mindful of potential intervention from Japanese authorities if yen weakness deepens further.

More Information in our Economic Calendar.