U.S. dollar is testing new lows after the release of the New Home Sales report, which indicated that New Home Sales increased by 1.1% month-over-month in February.
The FedWatch Tool indicates that there is a 54.9% probability that the Fed will leave the rate unchanged at the next meeting. Traders expect that the federal funds rate will decline to 400 – 425 bps by the end of the year. Such expectations are bearish for the American currency.
EUR/USD is currently trying to settle above the 1.0900 level. The flash reading of the Euro Area Consumer Confidence report indicated that Euro Area Consumer Confidence declined from -19 in January to -19.2 in February, compared to analyst consensus of -18.3. Traders ignored the disappointing report and focused on the general weakness of the U.S dollar.
GBP/USD
GBP/USD climbed above the 1.2300 level after BoE raised the rate from 4% to 4.25%. The BoE Monetary Policy Committee voted 7-2 in favor of the 25 bps rate increase. The nearest significant resistance level for GBP/USD is located at 1.2340. If GBP/USD manages to settle above this level, it will head towards the next resistance at 1.2400.
USD/CAD
USD/JPY has recently made an attempt to settle below the 130.50 level but lost momentum and rebounded above the 131 level. The dynamics of Treasury yields will remain the key catalyst for USD/JPY in the near term. If Treasury yields move lower due to the recent changes in Fed policy outlook, USD/JPY may find itself under more pressure.
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