The U.S. dollar extended its rally against the other major currencies on Wednesday, as yesterday's slew of strong economic data reinforced hopes that the Fed will hike rates sooner rather than later.

New orders for U.S. manufactured durable goods in April declined due to a pullback in orders for transportation equipment, but were in line with economists' expectations, the Commerce Department report showed.

Home prices in major U.S. metropolitan areas continued to show notable annual growth in the month of March, while new home sales rebounded more than expected in April, separate reports showed.

Consumer confidence in the U.S. improved more-than-expected in May after declining sharply in April, according to a report released by the Conference Board.

Investors are now pricing in a Fed rate hike in either July or September, as the Federal Reserve chairwoman Janet Yellen last week confirmed they would raise interest rates if the US economic recovery continued.

The greenback has been gaining this week, after last week's better-than-expected inflation data, as well as comments by Yellen that they will start raising rates this year. For the week, the greenback rose 1.28 percent against the yen, 0.62 percent against the pound, 1.08 percent against the franc and 1.25 percent against the euro.

The greenback spiked up to an 8-year high of 123.77 against the yen and nearly a 1-1/2-month high of 1.2483 against the Canadian dollar, from early lows of 122.77 and 1.2394, respectively. The next possible upside target for the greenback may be located around 125.00 against the yen and 1.26 against the loonie.

The greenback hit more than a 4-week high of 1.0826 against the euro and near a 3-week high of 1.5329 versus the pound, after having fallen to 1.0928 and 1.5436, respectively in previous deals. On the upside, the greenback is likely to find resistance around 1.05 against the euro and 1.52 against the pound.

The greenback strengthened to a 4-week high of 0.9542 against the franc, 5-week high of 0.7690 against the aussie and a 2-1/2-month high of 0.7211 against the kiwi, reversing from its prior lows of 0.9466, 0.7768 and 0.7267, respectively. Continuation of the greenback's uptrend may take it to resistance levels of around 0.97 against the franc, 0.75 against the aussie and 0.71 against the kiwi.

Looking ahead, the Bank of Canada will announce its interest rate decision at 10:00 am ET. Economists expect the bank to retain interest rates unchanged at 0.75 percent.

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