U.S. Dollar Retreats from Session Highs: EUR/USD, GBP/USD, USD/CAD, USD/JPY Analysis
Original article by Vladimir Zernov, FXEmpire
The U.S. dollar initially gained ground in the early part of the trading session today, but it has since pulled back from those highs amid shifting risk sentiment and market expectations surrounding future Federal Reserve policy. This article provides a comprehensive overview of the greenback’s performance, summarizing how the dollar fared against major currency pairs including EUR/USD, GBP/USD, USD/CAD, and USD/JPY.
Overall Market Sentiment
The currency market today reflected a mixed tone, with the U.S. Dollar Index (DXY) experiencing volatility. After hitting session highs, it retracted as traders reassessed monetary policy direction, taking into account recent economic data and comments from Federal Reserve officials.
Key Influences on the U.S. Dollar Movement:
– Profit-taking activity likely contributed to the dollar’s reversal from intraday highs.
– Falling Treasury yields reduced the appeal of the greenback.
– Diminishing fears around global risk weighed on the dollar as safe-haven demand subsided.
– The release of economic indicators has led to speculation that the FOMC (Federal Open Market Committee) may adopt a less aggressive tone in its future meetings.
EUR/USD: Euro Finds Support as Dollar Weakens
The EUR/USD currency pair gained ground during the U.S. afternoon trading hours, recovering strongly after initially dipping lower. Market sentiment surrounding Eurozone inflation data and U.S. Treasury yields played a large role in the price action.
Key Highlights:
– The pair moved toward the 1.0850 level as the dollar declined.
– European inflation reports showed signs of stickiness, which may support European Central Bank (ECB) hawkishness, providing support for the euro.
– The bond market showed a pullback in U.S. yields, particularly the 10-year Treasury yield retreating below the 4.35% threshold.
– Short-term technical indicators suggest a possible continuation of the EUR/USD uptrend if the dollar continues to sputter.
Technical View:
– Support sits around 1.0790 – a prior resistance level that may now act as a floor.
– Resistance is observed near the 1.0875 zone. A break above this level may take the pair toward the 1.0900 mark.
– Momentum oscillators such as the RSI and MACD point to buyers regaining control in the short term.
From a fundamental perspective, ECB commentary and further U.S. data releases, such as jobless claims and inflation statistics, could determine the next move. Traders should also keep an eye on speeches from central bankers later in the week.
GBP/USD: Sterling Recovers Following Mixed U.S. Session
The British pound gained traction versus the dollar as markets digested mixed economic signals from both the UK and the U.S. Earlier in the session, GBP/USD dipped below the 1.2700 mark but later rallied back above it as the dollar lost strength.
Supporting Factors:
– Traders anticipate that the Bank of England may maintain its current interest rates in response to persistent core inflation.
– U.K. PMIs released earlier in the week came in stronger than expected, lifting hopes for resilient economic performance.
– A weaker dollar has boosted foreign currencies, including the pound, across the board.
Technical Overview:
– The 1.2700 level has emerged as a critical short-term support.
– Resistance levels are located at 1.2780 and then 1.2850. A close above 1.2780 would suggest bullish continuation.
– The RSI remains neutral but tilted bullish, hovering near 55, suggesting room for further upside.
What to Watch:
– U.K. wage growth and unemployment figures in upcoming sessions could alter investor sentiment.
– Any dovish commentary from Fed officials may facilitate further GBP/USD gains.
USD/CAD: Canadian Dollar Gains on Rising Oil Prices
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