**Weekly Forex Forecast for DXY, EUR/USD, GBP/USD, and NZD/USD**
*By Justin Bennett (Original article credit: Justin Bennett, ForexFactory.com)*
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The Forex market continues to grapple with mixed macroeconomic signals and evolving central bank guidance. As we move into the new week of June 2024, traders are closely watching major pairs and the US Dollar Index (DXY) for directional cues. This in-depth forecast examines technical and fundamental analyses for DXY, EUR/USD, GBP/USD, and NZD/USD, with a view to mapping out potential price action scenarios.
**US Dollar Index (DXY) – Range-Bound as Rate Cuts Loom**
The US Dollar Index remains at a crossroads. After a strong rally in Q1, the index has meandered in a broad range for the past two months, reflecting shifting expectations over Federal Reserve monetary policy.
– Fundamental drivers:
– The Federal Reserve’s June meeting left rates unchanged at 5.25-5.50 percent, as widely expected.
– Policymakers now pencil in just one rate cut in 2024 (down from previous expectations of two to three), citing sticky inflation and a robust labor market.
– Recent data points including CPI and PPI suggest disinflation is taking longer to materialize.
– Markets remain sensitive to Fed speakers, who continue to emphasize “data dependency” for any easing decisions.
Technical outlook:
– The DXY is currently consolidating within a well-defined range, capped by resistance at 105.10 and supported by buyers around the 104.00 level.
– The 200-day moving average (now near 104.30) is acting as dynamic support on the daily chart.
– A break and hold above 105.10 would target 105.90 and potentially the Q1 highs near 106.50.
– Conversely, a decisive move below 104.00 could open a broader pullback toward 103.60 and 103.00.
Key levels to watch:
– Resistance at 105.10 and 105.90
– Support at 104.30, 104.00, and 103.60
Bulls continue to benefit from higher-for-longer US interest rate projections. However, the technical picture favors patience; until a range breakout occurs, both sides should expect further sideways price action, punctuated by choppy intraweek moves.
**EUR/USD – Bearish Bias Maintained Beneath 1.0850**
The euro endured volatility after the European Central Bank cut interest rates on June 6, signaling the beginning of an easing cycle. However, weak economic data from the eurozone continues to suggest that the ECB may lag far behind the Fed in future policy shifts.
– Fundamental drivers:
– The ECB reduced rates by 25 basis points, cutting its main refinancing rate to 4.25 percent.
– Inflation remains sticky in the eurozone, and policymakers have not committed to a set path for future cuts.
– Eurostat data showed sluggish growth and persistent unemployment, while German factory orders and industrial production figures have disappointed.
– Political uncertainty has emerged following the surprise victory for far-right parties in the European Parliament elections, increasing risk aversion toward euro-denominated assets.
Technical outlook:
– EUR/USD rebounded sharply from the 1.0700 zone in mid-June but failed to sustain momentum above the 1.0800 handle.
– The pair is capped by downtrend resistance from the December 2023 peak, with the 1.0850 level acting as a major ceiling.
– The daily chart shows lower highs since early June, suggesting persistent selling pressure on rallies.
– Downside targets include support at 1.0720 and major demand at the 1.0650 region.
– A daily close below 1.0700 would likely accelerate losses toward 1.0630 and 1.0560, the latter
Read more on GBP/USD trading.