US Dollar Pulls Back as Traders Take Profits

The U.S. dollar retreated from its yearly highs as traders took profits and reacted to falling Treasury yields. The yield on 2-year Treasuries dropped below 4.80%, while the 10-year Treasury yield settled near 5.27%. The U.S. Dollar Index (DXY) is now losing ground, with the nearest support levels identified at 101.50-101.65 and a further support range at 100.75-100.90 if the index falls below 101.50.

The EUR/USD pair rebounded despite disappointing Euro Area Retail Sales data, which showed a +0.1% month-over-month increase in August, missing the forecast of +0.2%. Additionally, Germany’s Factory Orders declined by -10.6% month-over-month in August, worse than the expected -1%. EUR/USD is currently testing resistance at 1.1250-1.1265, with potential upside towards the 50 MA at 1.1310 and further resistance at 1.1335-1.1350.

GBP/USD climbed above the 50 MA at 1.3234 and is testing resistance at 1.3285-1.3300. A successful breakout could push the pair towards the next resistance at 1.3385-1.3400. The Relative Strength Index (RSI) remains moderate, suggesting potential for further gains if supportive catalysts emerge.

USD/CAD pulled back as traders took profits after a recent rally. If the pair stays below the 1.4235 level, it could head towards the 50 MA at 1.4204 and further support at 1.4135-1.4150. Conversely, a move above 1.4250 could target resistance at 1.4350-1.4365.

USD/JPY remains near resistance at 158.00-158.50 despite the pullback in Treasury yields. Bank of Japan (BoJ) Governor Ueda’s speech, where he confirmed continued interest rate hikes, influenced trading. A break above 158.50 could target 160.00-160.50, while a move below the 50 MA at 157.76 could push the pair towards 157.00 and further support at 155.00-155.50.