The American currency has seen growth against most major currencies, owing somewhat to the Treasury yields hitting new highs over several weeks. This surge is mainly due to German inflation data and traders’ growing apprehension regarding the Federal Reserve’s potentially hawkish stance. The U.S. Dollar Index needs to surpass a crucial level of 105.00 for the U.S. Dollar’s strength to persist.
The EUR/USD exchange rate decreased due to Germany’s inflation figures. In May, German inflation rose by 0.1% month-to-month, compared to a predicted rise of 0.2%. If the EUR/USD rate falls further, it may hit the next support level between 1.0710 – 1.0725. Traders must closely follow the US’s economic developments, which could significantly affect the exchange rate.
The GBP/USD exchange rate is likely to decrease, as traders try to realize profits following a surge from lows in April. If GBP/USD rate continues to decline, it may move towards the upcoming support level between 1.2580 – 1.2600.
Underlying factors in US dollar’s robustness
This potential shrink could mirror the immediate market response to a stronger U.S. economic report and concerns about Brexit negotiations.
The USD/CAD exchange rate has increased due to trader focus shifting towards a decrease in commodity markets. A rise above the 1.3700 level could test the nearest resistance, predicted to be in the range of 1.3785 – 1.3800. Analysts recommend closely monitoring the crucial levels to predict future movements accurately. Important changes in oil prices could also swing the pair’s direction, given Canada’s significant role as an oil exporter.
Lastly, the USD/JPY rate achieved new highs with the increment of Treasury yields. An ultra-accommodative stance by the Bank of Japan (BoJ) is believed to be the cause of the Japanese yen’s weak performance. The nearest resistance for USD/JPY is expected within the 158.00 – 158.50 range. Investors need to pay close attention to BoJ’s stance on monetary policy as it may hint at future trends in the USD/JPY rate.
