**U.S. Dollar Strengthens Amid Rising Treasury Yields: Forex Market Analysis for EUR/USD, GBP/USD, USD/CAD, and USD/JPY**
*Original report by Vladimir Zernov, FXEmpire*
The U.S. Dollar gained strong upward momentum as U.S. Treasury yields climbed, strengthening the greenback across major currency pairs. Forecasts around inflation trajectory, interest rate expectations, and global economic indicators shaped investor sentiment, leading to noticeable shifts in the forex market.
The benchmark 10-year U.S. Treasury yield ascended to around 4.62%, pressuring other currencies while fueling demand for the dollar. With inflation levels remaining stubbornly above the Federal Reserve’s 2% target, traders recalibrated their expectations for interest rate cuts. As of now, the market anticipates only one rate cut in 2024—likely a significant driver behind the dollar’s rally on Tuesday.
Here’s a breakdown of key movements in major currency pairs as global investors adjust their portfolios based on economic signals and shifting monetary policy expectations.
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## EUR/USD: Stumbles as Dollar Gains Strength
The euro weakened against the U.S. dollar, slipping below the 1.0650 level as rising Treasury yields dampened investor appetite for the euro. Recent German inflation figures failed to spur bullish sentiment, leaving the euro exposed to further downside.
– **Technical Analysis:**
– EUR/USD settled below the critical 1.0670 support level.
– RSI (Relative Strength Index) remains below the resistance trendline, suggesting weak bullish momentum.
– The next major support level sits at 1.0600. If breached, EUR/USD may target the 1.0560—1.0570 range.
– On the upside, resistance emerges near 1.0670, followed by levels at 1.0700 and 1.0730.
– **Market Sentiment:**
– Concerns over sluggish Eurozone growth and softer inflation weigh on the euro.
– The ECB is widely expected to have more flexibility for easing than the Fed, which limits upside for EUR.
– **Outlook:**
– The fundamental divergence between the Fed’s hawkish stance and the ECB’s potential dovish pivot supports further weakness in EUR/USD short-term.
– A U.S. inflation report this week could offer further clues on whether the Fed will delay or proceed with rate cuts in the second half of 2024.
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## GBP/USD: Breaks Key Support Amid Dollar Pressure
The British pound also fell against the U.S. dollar, with GBP/USD breaching the 1.2450 support zone. Despite slightly hawkish commentary from the Bank of England in recent weeks, investors continue to favor the dollar due to higher U.S. yields and stronger economic performance.
– **Technical Analysis:**
– GBP/USD dropped below the 1.2450 level, extending downside momentum.
– Next support lies at 1.2400, with further pressure possibly moving the pair toward 1.2375 and 1.2310.
– Resistance levels are now at 1.2450 and 1.2520; a decisive move above these could spark recovery.
– **Driving Factors:**
– A firm dollar remains the primary headwind.
– Domestic UK economic data have been mixed, clouding forecasts for rate decisions.
– Inflation in the UK remains just slightly above target, increasing uncertainty over the timing and magnitude of monetary easing.
– **Market Outlook:**
– The pound may stay under pressure unless incoming economic data paint a clearer picture of resilience in the UK economy.
– Traders will be watching the BoE’s next move closely, especially in light of rate cuts already priced in by markets in the U.S. and EU.
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## USD/CAD: Gains on Broad Dollar Strength Despite Oil Prices
The Canadian dollar declined modestly against the U.S. dollar. USD/CAD
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