USD/CAD Rebounds After Yesterday’s Sell-Off

Key Insights

• GBP/USD is moving higher after the release of UK inflation data. 
• USD/JPY declined below the 135 level. 
• EUR/USD gains some ground ahead of the Fed decision. 

U.S. Dollar Is Under Some Pressure Ahead Of The Fed Decision

U.S. dollar is losing some ground ahead of the Fed Interest Rate Decision. The yield of 10-year Treasuries pulled back below the 3.50% level, which was bearish for the U.S. dollar.

The Fed decision is the key event of the week, and it remains to be seen whether traders will be ready for any significant moves in the last hours before the release of the Fed statement.

EUR/USD Tests Resistance At 1.0660

EUR/USD continues its attempts to settle above the resistance at 1.0660. Today, traders had a chance to take a look at the Euro Area Industrial Production report. The report indicated that Industrial Production declined by 2% month-over-month, compared to analyst consensus of -1.5%.

Tomorrow, EUR/USD traders will focus on the ECB Interest Rate Decision. Traders should expect that EUR/USD will remain extremely volatile in the remaining days of the week.

GBP/USD Tries To Climb Above 1.2400

GBP/USD is testing the 1.2400 level as the market sentiment remains bullish for the British pound.

UK Inflation Rate declined from 11.1% in October to 10.7% in November, so the BoE may be less hawkish. The Bank of England will announce its interest rate decision tomorrow, and traders should be prepared for fast moves.

USD/CAD Gains Ground Despite The Rebound In The Oil Markets

USD/CAD moved back above the 1.3550 level despite the strong rebound of WTI oil, which managed to settle above the $76 level.

Currently, USD/CAD is testing the resistance at 1.3570. In case this test is successful, USD/CAD will move towards the next resistance level, which is located at 1.3600. A move above this level will open the way to the test of the resistance at 1.3640.

On the support side, the nearest support level for USD/CAD is located at 1.3550. If USD/CAD declines below this level, it will move towards the next support at the 20 EMA at 1.3535. A successful test of the 20 EMA will push USD/CAD towards the next support level at 1.3500.

Other commodity-related currencies are swinging between gains and losses ahead of the Fed decision. AUD/USD settled above the 0.6850 level, while NZD/USD is trading near 0.6450.

USD/JPY Pulled Back Below 135

USD/JPY continues its attempts to settle below the important 135 level. Today, USD/JPY traders focused on the Tankan Large Manufacturers Index, which declined from 8 to 7, compared to analyst consensus of 6. The report provided some support to the Japanese yen, but USD/JPY dynamics will be determined by market’s reaction to the Fed decision.

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