U.S. Dollar Tests Multi-Month Lows As Risk Appetite Grows
- U.S. dollar is losing ground as traders bet that the Fed will be less hawkish.
- GBP/USD enjoyed a strong rally.
- USD/JPY moved towards the 136 level.
U.S. Dollar Remains Under Strong Pressure
Today, traders focused on the PCE Price Index, which declined from 6.3% in September to 6% in October. Personal Income increased by 0.7% in October, while Personal Spending grew by 0.8%. Initial Jobless Claims report indicated that 225,000 Americans filed for unemployment benefits in a week.
ISM Manufacturing PMI declined from 50.2 in October to 49 in November, compared to analyst consensus of 49.8. This report may put additional pressure on the American currency.
From a big picture point of view, the near-term dynamics of the U.S. dollar will depend on traders’ appetite for risk. If the risk appetite continues to grow, the American currency will move to lower levels.
EUR/USD Tries To Settle Above 1.0500
EUR/USD managed to get above the 1.0500 level and is trying to gain additional upside momentum.
Today, EUR/USD traders focused on the Euro Area Unemployment Rate report, which indicated that Euro Area Unemployment Rate declined from 6.6% in September to 6.5% in October. Analysts expected that it would remain unchanged.
Meanwhile, the final reading of the Euro Area Manufacturing PMI report showed that Euro Area Manufacturing PMI improved from 46.4 in October to 47.1 in November, compared to analyst consensus of 47.3.
While the Euro Area Unemployment Rate report provided some support to the European currency, the growing risk appetite served as the key catalyst for EUR/USD today.
GBP/USD Tested Resistance At 1.2300
Currently, GBP/USD is trying to stay above the support level at 1.2245. If GBP/USD moves below this level, it will head towards the support at 1.2215. A successful test of the support at 1.2215 will open the way to the test of the next support level at 1.2185.
On the upside, the nearest resistance for GBP/USD is located at 1.2275. A move above this level will push GBP/USD towards the resistance at 1.2300. If GBP/USD settles above 1.2300, it will head towards the next resistance at 1.2330.
NZD/USD Rallies While AUD/USD Stays Mostly Flat
Interestingly, Canadian dollar failed to gain ground against the U.S. dollar despite the strong rally in the oil markets. Currently, USD/CAD is trading near the 1.3450 level.
USD/JPY Pulled Back Towards 136
USD/JPY moved towards the 136 level as traders focused on the general weakness of the U.S. dollar. USD/JPY moved from 115 to 150 this year, so there is a potential for more weakness in USD/JPY in case the U.S. dollar remains under pressure against a broad basket of currencies.
For a look at all of today’s economic events, check out our economic calendar.