USD/CAD maintains a bullish stance

Key Movers

The US dollar index (DXY) successfully achieved fresh multi-month highs today within the 105.70 – 105.75 range. The ongoing bullish trend in the index is anticipated to present a sooner-than-later test of the 2023 peak at 105.88, recorded on March 8. If this level is surpassed, it may swiftly bring the 106 figure back into focus. The index is currently on its third consecutive day of gains, as traders analyze the Federal Reserve's decision yesterday to maintain interest rates. The dollar has gained additional momentum due to the optimistic evaluation of the US economic growth by the Fed, along with the possibility of another 25 basis point (bps) hike by year-end. The ongoing upward movement of the US dollar seems to be supported by the strong performance of US yields, with short-term yields reaching levels not seen since July 2006, near 5.20%.

EUR/USD retreated for the third session in a row and printed fresh lows around 1.0615 on Thursday. If the pair breaches this level soon, it could open the door to a potential retracement to the March low of 1.0516, the last defense ahead of the 2023 low at 1.0481. Similar to the US yields, German yields also saw slight gains today.

After surging above 1.2400 during the European trading hours yesterday, GBP/USD underwent a sudden reversal, concluding the day with losses. The pair continued its decline in the first half of today and reached its lowest point since early April, falling below the 1.2300 mark. The Bank of England (BoE) caught markets off guard by keeping interest rates steady at 5.25% with a divided vote.