**U.S. Dollar Tests Weekly Lows: Analysis for EUR/USD, GBP/USD, USD/CAD, USD/JPY**
*Based on the original article by James Hyerczyk, FX Empire*
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## Overview: U.S. Dollar Under Pressure
This week has seen notable shifts in the Forex markets as the U.S. Dollar continues to test its lowest levels for the week against major currency peers. Traders are paying close attention to pivotal economic reports, central bank comments, and shifting risk sentiment, all of which have contributed to increased currency volatility. Below is a detailed FX market analysis for key pairs EUR/USD, GBP/USD, USD/CAD, and USD/JPY as of the date of the original article.
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## U.S. Dollar Index: Key Insights
The U.S. Dollar Index (DXY), which measures the performance of the dollar against a wider basket of currencies, has declined throughout the week, approaching its lowest levels since mid-June. The shift comes in response to a confluence of weaker-than-expected U.S. economic data, dovish Federal Reserve commentary, and improved risk appetite in global markets.
Key Influencing Factors:
– **U.S. Economic Data:** Recent reports on manufacturing, consumer confidence, and housing have undershot analyst expectations, signalling potential cracks in economic resilience.
– **Federal Reserve Stance:** Fed officials have maintained a dovish or cautious approach in their public comments, further taming rate hike expectations.
– **Geopolitical Risks and Sentiment:** Easing global tensions and risk-on sentiment have weakened the appeal of the dollar as a safe-haven asset.
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## EUR/USD: Bulls Eye Higher Resistance
The euro has capitalized on dollar weakness, with EUR/USD advancing and repeatedly testing resistance near recent highs. The single currency is buttressed by better-than-expected Eurozone data and perceptions that the European Central Bank is less dovish than the Federal Reserve.
### Technical Overview
– **Short-Term Support:** Approximately 1.0670–1.0680
– **Resistance Zones:** Immediate resistance rests near 1.0760; key psychological barrier at 1.0800
– **Trend:** Upward momentum continues; price action favors euro bulls in the near term
### Fundamental Support
– **Eurozone Economic Activity:** Recent PMI surveys and industrial data surpassed market forecasts, fostering investor confidence.
– **ECB Policy Outlook:** While the ECB is not in a rush to raise rates further, its messaging has been less dovish than the Fed’s, supporting the euro.
– **U.S. Dovish Shift:** Diminished expectations of an additional Fed rate hike weigh on the dollar, favoring euro advances.
**Trading Considerations:**
– Watch for potential pullbacks towards the 1.0700 level, which may offer buying opportunities if the uptrend remains intact.
– A sustained break above 1.0800 could set the stage for further upside.
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## GBP/USD: Sterling Sentiment Remains Firm
The British pound is trading near weekly highs, tracking the euro’s gains against the dollar. Although U.K. economic data remain mixed, the overall tone is constructive for sterling given the broader dollar weakness and the Bank of England’s balanced policy approach.
### Technical Overview
– **Short-Term Support:** 1.2670–1.2700
– **Resistance Zones:** Immediate resistance at 1.2745; further upside targets 1.2800
– **Trend:** Bullish bias persists as long as price holds above support
### Fundamental Support
– **Bank of England Caution:** The BOE has signaled willingness to keep rates higher for longer, in stark contrast to the Fed’s dovish hints.
– **Mixed Data:** While inflation and retail figures have disappointed recently, labor market resilience and manufacturing activity provide a counterbalance.
– **Global Risk Sentiment:** Improved market confidence continues to buttress risk-oriented currencies like the pound.
**Trading
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