EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – U.S. Dollar Tests Multi-Month Highs As Inflation Exceeds Expectations
U.S. Dollar
U.S. Dollar Index rallied as traders reacted to U.S. inflation reports. Inflation Rate increased from 3.2% in February to 3.5% in March, compared to analyst consensus of 3.4%. Core Inflation Rate remained unchanged at 3.8%, while analysts expected that it would decline to 3.7%. Treasury yields rallied as bond traders bet on a more hawkish Fed. The yield of 2-year Treasuries climbed towards the 4.95% level, while the yield of 10-year Treasuries settled above 4.50%.
U.S. Dollar Index settled above the previous resistance at 104.40 – 104.60 and continues to move higher. A move above 105.50 will push U.S. Dollar Index towards the resistance at 105.75 – 106.00.
EUR/USD
EUR/USD dived as traders focused on U.S. inflation data. Most likely, Fed will be more hawkish than ECB, which is bearish for the euro.
From the technical point of view, EUR/USD is moving towards the support at 1.0700 – 1.0720.
GBP/USD
GBP/USD tests support at 1.2530 – 1.2550 as traders focus on U.S. inflation data and rising Treasury yields.
RSI remains in the moderate territory, so there is plenty of room to gain additional momentum in the near term.
USD/CAD
USD/CAD tests new highs as traders focus on general strength of the U.S. dollar. The pullback in precious metals markets put additional pressure on the Canadian dollar.
In case USD/CAD climbs above the 1.3700 level, it will head towards the next resistance, which is located in the 1.3780 – 1.3800 range.
USD/JPY
USD/JPY tested new highs, driven by rising Treasury yields. There are no signs of interventions from the BoJ.
In case BoJ does not provide additional support to the Japanese yen in the near term, USD/JPY may gain additional momentum and move towards the 155.00 level. Traders should note that short covering may serve as a significant catalyst in the upcoming trading sessions.
For a look at all of today’s economic events, check out our economic calendar.