What to Know

  • The U.S. Dollar Index moved away from session lows as traders focused on rising Treasury yields.
  • The yield of 2-year Treasuries climbed toward the 4.40% level, while the yield of 10-year Treasuries settled near 4.80%.
  • The yield of 30-year Treasuries settled near 5.25%, close to the critical 5.30% level.
  • EUR/USD traded mostly flat as Germany’s Exports report showed a -0.8% month-over-month decline in July, compared with an analyst forecast of 0%.
  • GBP/USD attempted to settle above the 1.3550 – 1.3565 resistance area after the UK BRC Retail Sales Monitor showed +0.5% year-over-year growth in August, below the +1.2% forecast.
  • USD/CAD attempted to break below 1.3750 – 1.3765 but rebounded toward 1.3790 as traders assessed U.S. – Canada trade tensions.
  • USD/JPY climbed back above 154.00 as rising Treasury yields offset some recent yen strength.
  • Japan’s second-quarter GDP Growth Rate came in at +0.4%, in line with analyst estimates.
  • Traders are watching the ECB Interest Rate Decision due Thursday and the Federal Reserve meeting on September 16.

Dollar Finds Support as Treasury Yields Rise

The U.S. dollar recovered from session lows as traders shifted attention back to the Treasury market, where yields remained elevated across key maturities. The U.S. Dollar Index moved away from intraday weakness as the yield of 2-year Treasuries climbed toward the 4.40% level and the yield of 10-year Treasuries settled near 4.80%. That move helped stabilize the greenback after a recent pullback, especially against currencies where rate expectations and yield differentials remain central to short-term direction.

The longer end of the Treasury curve also remained a focus for currency traders. The yield of 30-year Treasuries settled near 5.25%, close to the critical 5.30% level. Market participants continue to monitor whether official buyback efforts can ease pressure in longer-dated bonds, but so far, yields have remained high enough to support renewed interest in the dollar. In foreign exchange markets, elevated U.S. yields can increase the appeal of dollar-denominated assets, particularly when other central banks are facing weaker economic signals or more cautious policy backdrops.

From a technical perspective, some chart watchers are focused on the 99.00 level for the U.S. Dollar Index. If the index climbs above that area, it may head toward the nearest resistance level in the 99.25 – 99.40 range. A sustained move into that zone would suggest that the dollar’s rebound has gained further traction, while failure to clear 99.00 could leave the index vulnerable to another round of choppy trading.

EUR/USD Holds Above 1.1600 as German Export Data Disappoints

EUR/USD moved between modest gains and losses as traders reacted to Germany’s Exports data. The report showed that Exports decreased by -0.8% month-over-month in July, weaker than the analyst forecast of 0%. The data reinforced concerns about the strength of external demand in Europe’s largest economy and kept euro bulls cautious ahead of the next major policy catalyst.

Attention is now turning to the ECB Interest Rate Decision, which will be released on Thursday. Market participants appear reluctant to build aggressive positions before the decision, especially with the currency pair sitting close to an important technical support area. Central bank guidance will likely matter as much as the rate decision itself, because traders are trying to assess whether policymakers remain concerned about inflation pressures, growth risks, or both.

The nearest support level for EUR/USD is located in the 1.1600 – 1.1615 range. If the pair settles below 1.1600, technical traders may look for a move toward the next support area at 1.1500 – 1.1515. The relative strength index is described as being in moderate territory, which suggests there is room for momentum to build if a clear catalyst emerges. On the other hand, holding above the 1.1600 area may encourage traders to reassess whether downside pressure has already been absorbed.

GBP/USD Tests Resistance After Softer UK Retail Sales Data

GBP/USD continued to test the 1.3550 – 1.3565 resistance area as traders evaluated the latest UK retail sales signal. The BRC Retail Sales Monitor showed that Retail Sales increased by +0.5% year-over-year in August, falling short of the analyst forecast of +1.2%. While the report still showed growth, the miss versus expectations raised questions about consumer momentum and the broader demand environment.

The pound’s near-term direction may depend on whether buyers can push GBP/USD above 1.3565 and hold that breakout. If the pair settles above that level, the next resistance area is located in the 1.3635 – 1.3650 range. Such a move would suggest that traders are willing to look past the softer retail data, at least temporarily, and focus instead on broader dollar dynamics or expectations for UK monetary policy.

On the support side, traders are watching the 50 MA at 1.3533. A move below that level would put pressure on GBP/USD and could push the pair toward the next support zone at 1.3470 – 1.3485. For now, price action remains defined by a battle between local resistance and support, with the pair requiring a clear catalyst to escape its near-term range.

USD/CAD Rebounds as U.S. – Canada Trade Tensions Stay in Focus

USD/CAD moved lower earlier in the session as traders focused on the U.S. – Canada trade war. Canada’s Prime Minister Mark Carney said that counter-tariffs against the U.S. were necessary to protect Canadian businesses. The market reaction was notable because traders did not appear to treat the trade tensions as a straightforward negative catalyst for the Canadian currency.

Trade disputes can affect currency markets in several ways. They may influence expectations for growth, inflation, investment, and monetary policy, while also changing sentiment toward the economies involved. In this case, market participants seemed to view the Canadian dollar with relative resilience despite the escalation in rhetoric around tariffs. That suggests traders are weighing more than just the headline risk, including the pair’s technical setup and broader U.S. dollar direction.

From a technical point of view, USD/CAD attempted to settle below the support level at 1.3750 – 1.3765 but lost momentum and rebounded toward the 1.3790 level. If USD/CAD settles back above 1.3800, it may head toward the nearest resistance area at 1.3825 – 1.3840. A successful test of that zone could push the pair toward the next resistance level at 1.3900 – 1.3915. Until then, the 1.3750 – 1.3765 area remains an important line for traders watching whether Canadian dollar strength can extend.

USD/JPY Reclaims 154.00 as Traders Watch Yields and Intervention Risk

USD/JPY rebounded after a sharp sell-off, climbing back above the 154.00 level as traders reacted to rising Treasury yields and Japan’s second-quarter GDP Growth Rate report. The report showed that Japan’s GDP Growth Rate was +0.4%, in line with analyst estimates. The in-line growth reading gave traders little reason to dramatically revise their view of Japan’s economy, leaving the pair more sensitive to yield moves and policy expectations.

The yen has recently found support from expectations that the Bank of Japan may raise rates, while traders are also trying to assess whether authorities are prepared to intervene again at current levels. The possibility of intervention remains a key risk for USD/JPY, especially when the pair trades at levels that attract close market attention. At the same time, rising U.S. Treasury yields continue to support the dollar side of the pair, creating a tug of war between U.S. yield strength and Japanese policy risk.

Another important event on the calendar is the Federal Reserve meeting on September 16. Market participants are weighing whether the Fed may raise rates at that meeting, which would have direct implications for Treasury yields and the dollar. If USD/JPY stays above 154.00, technical traders may look for a move toward resistance at 155.00 – 155.50. A move above 155.50 would open the way to a test of the resistance level at 157.50 – 158.00.

Major FX Pairs Remain Driven by Policy Expectations

The latest moves across EUR/USD, GBP/USD, USD/CAD, and USD/JPY show how closely currency markets remain tied to the interest rate outlook. The dollar’s rebound from session lows came as Treasury yields rose, while individual currency pairs also reacted to local economic data and trade developments. For EUR/USD, Germany’s export decline and the upcoming ECB decision are central. For GBP/USD, softer retail sales data and technical resistance define the immediate picture.

For USD/CAD, U.S. – Canada trade tensions remain a major headline risk, but price action suggests that traders are not treating the dispute as a simple one-directional driver. For USD/JPY, the balance between elevated U.S. yields, potential Bank of Japan policy tightening, and possible intervention risk remains the key theme. With several major central bank events and data points in focus, traders may continue to favor tactical positioning around clearly defined support and resistance zones.

Frequently Asked Questions (FAQs)

Why did the U.S. dollar rebound from session lows?

The U.S. dollar rebounded as traders focused on rising Treasury yields. The yield of 2-year Treasuries climbed toward 4.40%, while the 10-year yield settled near 4.80%, improving the dollar’s appeal against major currencies.

What level matters for the U.S. Dollar Index?

Technical traders are watching the 99.00 level. If the U.S. Dollar Index climbs above 99.00, it may head toward resistance in the 99.25 – 99.40 range.

Why was EUR/USD mostly flat?

EUR/USD was mostly flat as traders reacted to Germany’s Exports report and stayed cautious before the ECB Interest Rate Decision on Thursday. Germany’s Exports declined by -0.8% month-over-month in July, compared with a forecast of 0%.

What are the key EUR/USD support levels?

The nearest support for EUR/USD is located in the 1.1600 – 1.1615 range. If the pair settles below 1.1600, the next support area is at 1.1500 – 1.1515.

What is driving GBP/USD price action?

GBP/USD is testing resistance at 1.3550 – 1.3565 after the UK BRC Retail Sales Monitor showed Retail Sales growth of +0.5% year-over-year in August, below the +1.2% analyst forecast.

What happened to USD/CAD?

USD/CAD attempted to settle below support at 1.3750 – 1.3765 but lost momentum and rebounded toward 1.3790 as traders assessed U.S. – Canada trade tensions and counter-tariff headlines.

Why did USD/JPY climb back above 154.00?

USD/JPY climbed back above 154.00 as rising Treasury yields supported the dollar. Traders also reviewed Japan’s second-quarter GDP Growth Rate, which came in at +0.4%, in line with analyst estimates.

What resistance levels are important for USD/JPY?

If USD/JPY holds above 154.00, it may move toward resistance at 155.00 – 155.50. A move above 155.50 could open the way to a test of 157.50 – 158.00.

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