U.S. Dollar Tests New Highs Amid Sell-Off In Bond Markets: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Tests New Highs

U.S. Dollar Index gains ground as traders focus on rising oil prices and react to the developments in government bond markets.

Brent oil moved towards the $110.00 level as traders worried that U.S. may restart the military operation against Iran. These worries raised demand for safe-haven assets and provided support to the American currency.

European government bond markets suffered a strong sell-off today. Japanese bonds have also found themselves under strong pressure. The yield of 10-year UK government bonds climbed above 5.18%, the highest level since June 2008.

From a big picture point of view, bond traders have started to worry that rising oil prices will trigger a bond crisis. As a result, traders rushed to safety of the U.S. dollar as the U.S. is the world’s biggest oil producer.

U.S. Dollar Index climbed above the resistance at 98.85 – 99.00 and is trying to settle above the 99.25 level. In case this attempt is successful, U.S. Dollar Index will move towards the next resistance at 99.70 – 99.85.

EUR/USD Remains Under Strong Pressure

EUR/USD is losing ground as traders react to the developments in bond markets. Trump – Xi summit did not deliver a breakthrough, and traders worry that the situation in the Middle East could get worse.

EUR/USD settled below the previous support at 1.1665 – 1.1670 and is trying to settle below the 1.1625 level. A move below this level will open the way to the test of the next support at 1.1585 – 1.1600.

GBP/USD Tests Support At 1.3335 – 1.3350

GBP/USD tests new lows amid political crisis in the UK. The sell-off in UK government bond markets puts additional pressure on the British pound.

Currently, GBP/USD is trying to settle below the support at 1.3335 – 1.3350. In case this attempt is successful, GBP/USD will head towards the next support level, which is located in the 1.3185 – 1.3200 range. RSI is in the oversold territory, so the risks of a rebound are rising.

USD/CAD Moves Higher As Precious Metals Markets Retreat

USD/CAD gained ground as traders focused on the strong sell-off in precious metals markets, which was triggered by rising oil prices. Other commodity-related currencies have found themselves under strong pressure in today’s trading session.

The nearest resistance level for USD/CAD is located in the 1.3775 – 1.3790 range.  A successful test of this level will open the way to the test of the next resistance at 1.3860 – 1.3875.

USD/JPY Climbed Above The 158.50 Level

USD/JPY continues to move higher as traders focus on rising Treasury yields and ignore the risk of interventions from the BoJ. The yield of 2-year Treasuries climbed above the 4.07% level, while the yield of 10-year Treasuries settled above 4.57%.

From the technical point of view, USD/JPY climbed above the resistance at 158.00 – 158.50 and is heading towards the 159.00 level. If USD/JPY settles above 159.00, it will head towards the psychologically important 160.00 level. A move above 160.00 will push USD/JPY towards the resistance level at 161.50 – 162.00.

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