U.S. Dollar Retreats As U.S. – Iran Talks Stall: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Pulls Back As Oil Markets Test New Highs

U.S. Dollar Index is losing ground as traders focus on geopolitical developments and react to the Dallas Fed Manufacturing Index report.

Oil prices are moving higher as U.S. – Iran talks stalled. Interestingly, geopolitical uncertainty did not increase demand for the safe-haven dollar.

Dallas Fed Manufacturing Index decreased from -0.2 in March to -2.3 in April, compared to analyst forecast of -0.8. The weaker-than-expected report put additional pressure on the American currency.

The nearest support level for U.S. Dollar Index is located in the 98.00 – 98.15 range. If U.S. Dollar Index declines below the 98.00 level, it will move towards the next support, which is located in the 97.15 – 97.30 range.

EUR/USD Gains Ground At The Start Of The Week

EUR/USD gained ground despite the weaker-than-expected GfK Consumer Confidence report from Germany. The report showed that Consumer Confidence decreased from -28.1 in April to -33.3 in May, compared to analyst forecast of -29.5.

Currently, EUR/USD is trying to settle above the 50 MA at 1.1750. In case this attempt is successful, EUR/USD will get to the test of the resistance at 1.1765 – 1.1780. A move above the 1.1780 level will push EUR/USD towards the next resistance at 1.1835 – 1.1850.

GBP/USD Tests Resistance At 1.3570 – 1.3585

GBP/USD gained ground as traders focused on general weakness of the American currency. RSI is in the moderate territory, so there is plenty of room to gain additional momentum in case the right catalysts emerge.

The nearest resistance level for GBP/USD is located in the 1.3570 – 1.3585 range. This resistance level has been tested several times and proved its strength. In case GBP/USD climbs above the 1.3585 level, it will move towards the next resistance at 1.3685 – 1.3700.

USD/CAD Remains Under Pressure Amid Rising Demand For Commodity-Related Currencies

USD/CAD tests new lows as traders focus on rising oil prices. The pullback in precious metals markets did not put pressure on the Canadian dollar today. Other commodity-related currencies gained solid upside momentum in today’s trading session.

Currently, USD/CAD attempts to settle below the support level at 1.3620 – 1.3635. If USD/CAD stays below the 1.3620 level, it will head towards the next support at 1.3535 – 1.3550.

USD/JPY Stays Range-Bound As Traders Remain Cautious Amid Intervention Risks

USD/JPY is mostly flat despite rising Treasury yields. The yield of 2-year Treasuries climbed above the 3.80% level, while the yield of 10-year Treasuries settled near 4.33%.

From a big picture point of view, USD/JPY remains stuck below the psychologically important 160.00 level. Traders worry that BoJ may intervene in case USD/JPY crosses the 160.00 mark.

Meanwhile, there are no bullish catalysts for the Japanese yen. Japan is dependent on energy imports, so high oil prices put significant pressure on the country’s economy.

Traders are also cautious ahead of Fed decision, which will be released on Wednesday. Analysts expect that Fed will keep the federal funds rate unchanged at 3.75%.

USD/JPY found support near the 50 MA at 159.18 and is trying to climb above the 159.50 level. In case USD/JPY settles above 159.50, it will head towards the important 160.00 level. A move above 160.00 will push USD/JPY towards the resistance at 161.50 – 162.00.

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