The currency pairs USD/JPY and USD/CAD are showing significant gains amid the intensifying conflict between Israel and Iran, which has pushed oil prices higher. Investor fears have driven demand for the US dollar – a so-called safe-haven asset. Statements by Donald Trump regarding the start of Iran’s “unconditional capitulation” and the US’s readiness to completely put an end to its nuclear programme have further fuelled concerns over an escalation of the conflict, thereby increasing demand for the US dollar.
Today, investor attention will be focused on the Federal Reserve meeting, which may offer signals regarding the future path of monetary policy. In addition, market participants will be closely watching upcoming US employment data, as it could influence expectations around bond yields and the trajectory of dollar pairs.
USD/JPY
The USD/JPY pair has risen to the 145.20 level, reflecting a tilt towards the dollar and a weakening yen amid geopolitical risks and rising US Treasury yields. Technical analysis of USD/JPY suggests a possible breakout above the three-week resistance at 145.60. A piercing line candlestick pattern has formed on the daily chart; if the pattern works, it could lead to a retest of the key resistance level at 146.30. At the same time, a rebound from current levels and a return to the medium-term sideways channel of 142.70–144.40 cannot be ruled out.
Events that could influence the USD/JPY pair:
- Today at 15:30 (GMT+3): US Initial Jobless Claims
- Today at 15:30 (GMT+3): US Building Permits
- Today at 21:00 (GMT+3): FOMC Statement
USD/CAD
The USD/CAD pair also saw a sharp rise, jumping to 1.3670, amid higher oil prices and mounting geopolitical risks. A bullish engulfing candlestick pattern has formed on the daily chart; if confirmed, this may trigger a renewed rise towards the 1.3740-1.3780 range. A firm move below 1.3600, however, could lead to a retest of recent lows.
Events that could influence USD/CAD pricing:
- Today at 17:30 (GMT+3): US Crude Oil Inventories
- Today at 18:15 (GMT+3): Speech by Bank of Canada Governor Macklem
- Today at 20:30 (GMT+3): Bank of Canada Meeting Summary
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