Weekly Forex Forecast for DXY, EUR/USD, GBP/USD, USD/CHF
Based on the original analysis by Justin Bennett from Forex Factory
Source: https://www.forexfactory.com/news/1357833-weekly-forex-forecast-for-dxy-eurusd-gbpusd-usdchf
As the foreign exchange markets transition into June, traders are closely monitoring the key developments surrounding the U.S. dollar and its primary counterparts. The past two weeks in the currency markets have been particularly volatile with major support and resistance levels being tested across multiple USD pairs.
This weekly outlook focuses on four significant instruments:
– U.S. Dollar Index (DXY)
– EUR/USD
– GBP/USD
– USD/CHF
Below is an in-depth examination of each of these instruments, identifying key levels, trends, and what traders should watch during this trading week.
U.S. Dollar Index (DXY)
The DXY closed the previous week at the 104.57 level, marking a notable rejection of a key support zone between 104.30 and 104.40. This zone has previously served as both support and resistance, and price action continues to respond to these levels.
Key Technical Highlights:
– The index has turned back higher after establishing a low at this support area
– A daily bullish engulfing candle formed on May 30, indicating strong buying interest
– The upper resistance level that traders should monitor is around 105.05 and then again near 105.75
– A decisive daily close above 105.05 would mark a bullish continuation pattern
However, traders should also consider the downside scenario if DXY fails to maintain momentum above current support.
Bearish Scenarios:
– A daily close back below the 104.30–104.40 area would expose 103.60 as the next support
– Below 103.60, the next floor lies around 102.50, which has previously helped form a bullish reversal in early 2024
Momentum Indicators:
– The Relative Strength Index (RSI) on the daily chart is rebounding toward neutral territory after dropping into slight oversold levels
– Volume on the recent bullish reversal was moderate, suggesting cautious optimism among buyers
DXY remains range-bound in the broader context, although short-term sentiment is leaning bullish following the rebound from support. A breakout either above 105.75 or below 104.30 will likely dictate the weekly and monthly trend going forward.
EUR/USD
The euro remains inversely correlated to the U.S. dollar and continues to trade within a defined range. The pair closed last week around 1.0843 after facing heavy pressure from the key resistance zone near 1.0900.
Technical Setup:
– EUR/USD reached the 1.0895–1.0905 resistance last week but failed to break through
– This zone has capped upward movement since April and proved its significance once again
– Support sits at 1.0780 with further downside potential to 1.0725 if bearish sentiment intensifies
Bearish Indicators:
– Rejection from 1.0905 formed a bearish pin bar on the daily chart, indicating potential for further decline
– A break below short-term support at 1.0780 may prompt a bearish continuation toward 1.0725 and then 1.0650
– The moving averages are currently flattening, offering little direction but suggesting consolidation
Important Considerations:
– European Central Bank rhetoric in the coming weeks may influence euro pairing significantly
– Eurozone inflation data scheduled this week could also set the tempo for EUR movement
Bullish Counterpoints:
– A daily close above 1.0910 would negate near-term bearish pressure and open the way to 1.0980 and possibly 1.1050
– RSI remains around 50, signaling a lack of momentum and indecision in the current price action
Immediate focus remains on whether EUR/USD can hold
Read more on EUR/USD trading.