U.S. Dollar Gains Ground Ahead Of Decision: Analysis For EUR/USD, GBP/USD, USD/CAD, USD/JPY

U.S. Dollar Gains Some Ground As Traders Prepare For Fed Decision

U.S. Dollar Index is moving higher as traders wait for Fed Interest Rate Decision, which will be released soon.

FedWatch Tool indicates that there is a 92.7% probability that Fed will raise the federal funds rate by 25 bps.

Today, traders had a chance to take a look at the Retail Sales report for August. The report indicated that Retail Sales increased by +1.2% month-over-month, compared to analyst forecast of +0.8%.

NAHB Housing Market Index declined from 35 in August to 32 in September, compared to analyst consensus of 32. Higher interest rates put pressure on builder sentiment.

The nearest resistance level for U.S. Dollar Index is located in the 99.85 – 100.00 range. In case U.S. Dollar Index manages to settle above the 100.00 level, it will head towards the next resistance, which is located in the 100.50 – 100.65 range.

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EUR/USD Moves Lower As Traders Worry About Hawkish Fed

EUR/USD is losing some ground as traders prepare for Fed decision. In the EU, traders focused on the Euro Area Industrial Production report. The report showed that Euro Area Industrial Production declined by -0.1% month-over-month in July, compared to analyst forecast of -0.2%.

If EUR/USD pulls back below the support level at 1.1500 – 1.1515, it will head towards the next support, which is located in the 1.1420 – 1.1435 range. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.

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GBP/USD Tests New Lows After UK Inflation Data

GBP/USD tests new lows as traders bet on hawkish Fed and react to inflation data from the UK.

UK Inflation Rate increased from 2.9% in July to 3.1% in August, in line with analyst consensus. Core Inflation Rate remained unchanged at 2.6%. The report has also met analyst expectations.

GBP/USD declined below the support at 1.3470 – 1.3485 and is trying to settle below the 1.3450 level. In case this attempt is successful, GBP/USD will head towards the next support at 1.3400 – 1.3415.

USD/CAD Tests New Highs As Traders Stay Bullish

USD/CAD is moving higher despite rising precious metals markets. Other commodity-related currencies are mostly flat in todays trading session.

USD/CAD moved above the resistance at 1.3900 – 1.3915 and is heading towards the 1.3950 level. A move above 1.3950 will open the way to the test of the resistance at 1.3985 – 1.4000.

USD/JPY Is Stuck Below The 155.50 Level

USD/JPY continues its attempts to settle above the resistance level at 155.00 – 155.50 as traders ignore the pullback in Treasury yields. The yield of 2-year Treasuries declined below the 4.62% level, while the yield of 10-year Treasuries settled near 4.96%.

If USD/JPY settles above the 155.50 level, it will head towards the resistance level at 158.00 – 158.50. On the support side, a move below the 50 MA at 154.41 will push USD/JPY towards the support level at 152.50 – 153.00. Id note that USD/JPY will be extremely sensitive to Fed decision and comments from Fed Chair Warsh. In case Fed is less hawkish than expected, USD/JPY may find itself under material pressure.