Dollar index climbs as analysts look ahead to major currency trends

In early trading in Asia on Friday (March 22), the U.S. dollar index fluctuated within a narrow range and stayed near its high in nearly three weeks. The U.S. dollar index rose on Thursday (March 21), driven by a better-than-expected U.S. Purchasing Managers Index (PMI) report. The composite PMI fell to 52.2 from 52.5, slightly lower than expected but still strong. Meanwhile, the Bank of England decided to keep interest rates unchanged at 5.25%, in line with analysts' expectations, sending the pound lower. Independent trader and analyst Vladimir Zernov provides forward analysis on the U.S. Dollar Index, EUR/USD, GBP/USD, and USD/JPY. Here are his main points:

dollar index

The US dollar index is trying to climb above 104.00. If successful, it will face resistance in the range of 104.40 – 104.60.

EUR/USD

Struggling with the EU manufacturing PMI report, the EUR/USD pair retreated. If it falls below the 1.0850 level, it will test the support level of 1.0810–1.0830.

GBP/USD

GBP/USD is testing the support levels of 1.2650 – 1.2685, a successful test will pave the way for a test of the support levels of 1.2530 – 1.2550.

USD/CAD

Affected by the correction in the commodity market, USD/CAD rose. If it breaks through the 1.3550 level, it will challenge the resistance level of 1.3600 – 1.3620.

USD/JPY

USD/JPY rebounded to the 151.50 level, and the Bank of Japan may intervene to protect the yen to see if it can stand above 152.00.

If USD/JPY can hold above 152.00, it could gain strong upside momentum. However, traders should remain cautious as the Bank of Japan may intervene to protect the yen.