U.S. Dollar Retreats As Geopolitical Premium Falls: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Moves Lower As Traders React To Geopolitical Developments

U.S. Dollar Index pulls back as traders react to economic reports and focus on geopolitical developments.

The U.S. continues its military operation against Iran, while the Strait of Hormuz remains closed. Recent reports indicated that Iran contacted U.S., asking for negotiations. Iranian officials denied these reports, but oil prices moved lower. Falling geopolitical premium put pressure on the American currency.

Today, traders had a chance to take a look at the ISM Services PMI report for February. The report indicated that ISM Services PMI increased from 53.8 in January to 56.1 in February, compared to analyst forecast of 53.5. Numbers above 50 show expansion.

ADP Employment Change report showed that private businesses added 63,000 jobs in February, compared to analyst consensus of 50,000.  The better-than-expected reports did not provide support to the American currency as traders have mostly focused on the geopolitical situation.

Currently, U.S. Dollar Index is trying to stay below the support at 98.90 – 99.05. In case this attempt is successful, U.S. Dollar Index will move towards the next support level, which is located in the 98.00 – 98.15 range.

EUR/USD Gains Ground As Euro Area Unemployment Rate Drops To 6.1%

EUR/USD rebounds as traders focus on the better-than-expected Euro Area Unemployment Rate report.

The report showed that Euro Area Unemployment Rate declined from 6.2% in December to 6.1% in January, compared to analyst forecast of 6.2%.

EUR/USD settled above the support at 1.1585 – 1.1600 and is trying to climb above the 1.1650 level. If EUR/USD settles above 1.1650, it will move towards the resistance level at 1.1675 – 1.1690.

GBP/USD Rebounds As Traders React To U.S. Economic Reports

GBP/USD gained ground as traders focused on general weakness of the American currency and took profits after the recent move.

The nearest resistance level for GBP/USD is located in the 1.3400 – 1.3415 range. If GBP/USD climbs above the 1.3415 level, it will move towards the 50 MA at 1.3456. A move above the 50 MA will push GBP/USD towards the resistance at 1.3485 – 1.3500.

USD/CAD Tests Support At 1.3650 – 1.3665 As Precious Metals Rebound

USD/CAD continues its attempts to settle below the support at 1.3650 – 1.3665 as traders focus on the rebound in precious metals markets. Other commodity-related currencies managed to gain ground in today’s trading session.

It should be noted that energy markets have started to pull back, but this move did not put any pressure on the Canadian dollar.

If USD/CAD declines below the 1.3650 level, it will move towards the next support, which is located in the 1.3585 – 1.3600 range. RSI is in the moderate territory, so there is plenty of room to gain additional momentum in case the right catalysts emerge.

USD/JPY Pulls Back As Japan’s Consumer Confidence Beats Estimates

USD/JPY declined as traders took some profits off the table after the strong rebound from February lows.

Treasury yields were mostly unchanged in today’s trading session, so traders focused on geopolitical news and reacted to Japan’s Consumer Confidence report.

The report indicated that Consumer Confidence increased from 37.9 in January to 40.0 in February, compared to analyst consensus of 38.2.

Traders also worry that BoJ will attempt to defend the yen in case USD/JPY climbs above the 158.50 level.

In case USD/JPY pulls back below the 50 MA at 156.21, it will head towards the nearest support level at 154.50 – 155.00.

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