Title: U.S. Dollar Strengthens as Solid Housing Data Boosts Sentiment: EUR/USD, GBP/USD, USD/CAD, and USD/JPY Forecasts
Author: Vladimir Zernov (Original article published on FXEmpire)
The U.S. dollar advanced against major currencies on June 18, 2024, following the release of stronger-than-expected housing data. The upward momentum reflects increasing investor confidence in the resilience of the U.S. economy, further complicating the outlook for Federal Reserve monetary policy. The greenback’s gains were spread across key currency pairs, including the euro (EUR/USD), the British pound (GBP/USD), the Canadian dollar (USD/CAD), and the Japanese yen (USD/JPY).
This article provides a detailed analysis of the dollar’s movement, evaluates technical chart setups for each major pair, and outlines what traders should watch in the coming sessions. Data-driven catalysts, such as housing starts and upcoming economic events, are key in shaping near-term market volatility.
Housing Starts Exceed Expectations
Data released on June 18 showed that building permits in the U.S. came in at 1.386 million (annualized) in May, while housing starts surged to 1.631 million. Both figures beat expectations, with housing starts sharply above the market consensus of 1.39 million.
These data points point to an expansion in the real estate sector, a sign that parts of the economy are showing resilience despite high interest rates. The upbeat figures are likely to reinforce the Federal Reserve’s cautious stance on rate cuts, thereby lending further strength to the U.S. dollar.
How U.S. Data Supports the Dollar:
– Rising housing starts signal consumer and builder confidence
– Lower risk of a hard landing
– Reduces pressure on Fed to cut rates soon
– Enhances the attractiveness of the dollar as a safe haven and yield-bearing asset
Let’s examine how this bullish dollar sentiment is playing out across several key currency pairs.
EUR/USD: Range Holds, but Momentum Favors Bears
The euro remained under pressure against the U.S. dollar, trading below the 1.0750 level following the housing data. While the pair has not broken firmly out of its range, technical analysis suggests a bearish bias is emerging.
Price Action Overview:
– EUR/USD tested support levels near 1.0725 after the U.S. housing report
– Resistance is seen near 1.0760, a level that previously acted as a consolidation zone
Technical Indicators:
– Relative Strength Index (RSI) is trending lower but not yet in oversold territory
– Moving Averages: The 20 EMA has crossed below the 50 EMA, indicating potential downside acceleration
– MACD has turned negative on the 4-hour chart, adding to the bearish tone
Key Support and Resistance Levels:
– Support:
– 1.0725: Minor support and recent intraday low
– 1.0700: Psychological level and near-term downside target
– 1.0650: May’s monthly low
– Resistance:
– 1.0760: Short-term resistance zone
– 1.0800: Important psychological level and recent top
– 1.0850: Major resistance if a breakout occurs
Market Sentiment:
– Traders are cautious on the euro amid uncertainties tied to the European Central Bank’s dovish stance
– Political risks in France and broader eurozone integration debates weigh on the currency
– The lack of aggressive ECB tightening limits upside potential for EUR/USD
Outlook:
Unless the euro breaks above 1.0800 convincingly, the pair is likely to remain weak. A move below support at 1.0700 could open the door toward 1.0650 or lower.
GBP/USD: Struggles Near Resistance as Dollar Prevails
The British pound also declined against the dollar, although its losses were more modest. GBP/USD dipped to test the
Explore this further here: USD/JPY trading.