U.S. Dollar Retreats From Session Highs After Weak ISM Report: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Index Tests The 98.50 Level

U.S. Dollar Index moved away from session highs as traders reacted to the weaker-than-expected ISM Manufacturing PMI index report. The report showed that ISM Manufacturing PMI declined from 48.2 in November to 47.9 in December, compared to analyst forecast of 48.3. Numbers below 50 show contraction.

In case U.S. Dollar Index settles below the 98.50 level, it will move towards the nearest support, which is located in the 98.00 – 98.15 range.

EUR/USD Moves Away From Session Lows

EUR/USD rebounded from session lows as traders focused on the economic data from the U.S. Traders also prepared for tomorrow’s inflation report from Germany, which may have a material impact on market dynamics.

The nearest resistance level for EUR/USD is located in the 1.1715 – 1.1730 range. A move above the 1.1730 level will push EUR/USD towards the next resistance at 1.1805 – 1.1820.

GBP/USD Tests Resistance At 1.3475 – 1.3490

GBP/USD gained upside momentum and climbed above the nearest resistance at 1.3475 – 1.3490.

If GBP/USD stays above the 1.3490 level, it will move towards the next resistance at 1.3575 – 1.3590. RSI remains in the moderate territory, so there is plenty of room to gain additional momentum in case the right catalysts emerge.

USD/CAD Retreats From Session Highs

USD/CAD pulled back from session highs as traders focused on the rally in precious metals markets. Other commodity-related currencies gained ground in today’s trading session.

A successful test of the support level at 1.3720 – 1.3735 will open the way to the test of the next support at 1.3670 – 1.3685.

USD/JPY Moves Lower As Treasury Yields Fall

USD/JPY is losing ground as traders react to the pullback in Treasury yields. The yield of 2-year Treasuries declined towards the 3.46% level, while the yield of 10-year Treasuries pulled back towards 4.17%.

Currently, USD/JPY is trying to settle below the 50 MA at 156.51. In case this attempt is successful, USD/JPY will move towards the next support, which is located in the 154.50 – 155.00 range.

For a look at all of today’s economic events, check out our economic calendar.