U.S. Dollar Retreats As Traders React To Central Banks’ Rate Decisions: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Pulls Back As Traders Focus On Monetary Policy Decisions

U.S. Dollar Index retreats as traders stay focused on recent Fed decision and Powell’s comments.

Today, traders also had a chance to take a look at the New Home Sales report. The report indicated that New Home Sales decreased by -17.6% month-over-month in January, compared to analyst forecast of -0.9%.

Currently, U.S. Dollar Index is trying to settle below the 50 MA at 99.59. In case this attempt is successful, U.S. Dollar Index will move towards the nearest support level, which is located in the 98.85 – 99.00 range.

On the upside, a move above the resistance at 99.70 – 99.85 will open the way to the test of the resistance level at 100.35 – 100.50.

EUR/USD Gains Ground As ECB Keeps Rates Unchanged

EUR/USD gains ground as traders focus on the ECB Interest Rate Decision. The European Central Bank left the rate unchanged at 2.15%, in line with analyst estimates.

ECB President Lagarde highlighted upside risks for inflation due to war in Iran. Notably, ECB boosted its inflation forecast for 2026 to 2.6%. As a result, traders have started to prepare for potential rate hikes from the ECB.

EUR/USD attempts to settle above the resistance level at 1.1510 – 1.1525. In case this attempt is successful, EUR/USD will move towards the next resistance, which is located in the 1.1585 – 1.1600 range.

GBP/USD Rallies As Traders Focus On Hawkish BoE

GBP/USD rallied as traders focused on the BoE Interest Rate Decision. The Bank of England left the interest rate unchanged at 3.75%, in line with analyst consensus.

Importantly, there were no votes for a rate cut. Analysts expected that 2 Boe members will vote for a cut.

GBP/USD moved above the resistance at 1.3315 – 1.3330 and is trying to stay above the 50 MA at 1.3346. If this attempt is successful, GBP/USD will head towards the next resistance level, which is located in the 1.3400 – 1.3415 range.

USD/CAD Is Flat As Traders Ignore The Sell-Off In Precious Metals Markets

USD/CAD is mostly flat despite the strong sell-off in precious metals markets. Gold declined below the $4600 level, while silver pulled back towards $70.00.

Oil prices have moved away from session highs in a volatile trading session. Interestingly, other commodity-related currencies gained ground today.

From the technical point of view, USD/CAD attempts to settle above the resistance level at 1.3720 – 1.3735. In case this attempt is successful, USD/CAD will move towards the next resistance level, which is located in the 1.3800 – 1.3815 range.

USD/JPY Dives As BoJ Signals It Could Raise Rates At The Next Meeting

USD/JPY is losing ground as traders focus on BoJ Interest Rate Decision. The Bank of Japan left the rate unchanged at 0.75%, in line with expectations.

BoJ Governor Ueda noted that the situation in the Middle East created new risks. He signaled that BoJ could raise rates at the next meeting despite the potential weakness of the economy due high energy prices.

Ueda’s hawkish comments provided support to the Japanese yen and pushed USD/JPY towards the support level at 158.00 – 158.50.

In case USD/JPY manages to settle below the 158.00 level, it will head towards the next support at 154.50 – 155.00. Traders should closely monitor USD/JPY in the upcoming trading sessions as its moves may have a major impact on other markets due to yen’s role in global carry trade.

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