The U.S. dollar is experiencing a pullback as traders react to a weaker-than-expected Michigan Consumer Sentiment report. The latest data revealed that Consumer Sentiment decreased from 64.7 in February to 57.9 in March, falling short of the analyst forecast of 63.1. This negative sentiment has impacted the U.S. Dollar Index (DXY), which is now approaching the support range of 103.20 – 103.40. EUR/USD has made an attempt to settle above the 1.0900 level.
This movement is in response to better-than-anticipated Wholesale Prices in Germany, which increased by 0.6% month-over-month in February against the analyst forecast of 0.2%. A successful test of the resistance at 1.0920 – 1.0935 could push the pair towards the next resistance level at 1.1030 – 1.1050. GBP/USD is retreating after a disappointing GDP report from the UK.
The GDP declined by 0.1% month-over-month in January, missing the analyst forecast of a 0.1% increase. Should GBP/USD settle below the 50-day moving average at 1.2900, it may head towards the support level at 1.2810 – 1.2830. USD/CAD is moving lower as demand for commodity-related currencies has increased.
U.S. dollar’s trend amid weak sentiment
The pair’s nearest support level is in the 1.4330 – 1.4350 range. A move below the 1.4330 level might send USD/CAD towards the next support at 1.4180 – 1.4200.
USD/JPY has gained some ground as U.S. Treasury yields continue to rebound from March lows. The rising yields are bullish for USD/JPY, especially given Japan’s persistently low yields. The nearest resistance level for USD/JPY is in the 149.00 – 149.50 range.
Should USD/JPY climb above the 149.50 level, it might target the next resistance at 152.00 – 152.50. “The euro is about 6% up against the dollar, and the move last week in the euro was one of the biggest over the past three or four decades,” said Jonas Goltermann at Capital Economics. Joseph Gagnon of the Peterson Institute for International Economics summarized the situation, saying, “The tariffs are so destructive, they’re causing people to put spending, especially big business investment plans, on hold.
This raises the risk of a recession, scares the markets, and would also call for Fed cuts and a weaker economy.”
“We’ve had a very large dollar weakening move in the previous days and weeks, and it feels like we’re entering a bit of a consolidation period,” said Vassili Serebriakov, FX strategist at UBS in New York. “We do see the possibility that the dollar recovers because we’re still being hit with tariffs news and we have this early April reciprocal tariff deadline coming up.”
