**Weekly Forex Forecast for DXY, EUR/USD, GBP/USD, and NZD/USD**
*Originally written by Justin Bennett*
As the forex market unfolds into a brand-new trading week, traders are scrutinizing the U.S. dollar’s trajectory. After a volatile period involving significant economic data and central bank rhetoric, the forex landscape remains delicate with several major currency pairs displaying bearish technical setups. This forecast will analyze the U.S. Dollar Index (DXY), EUR/USD, GBP/USD, and NZD/USD, providing in-depth technical insights and outlining potential scenarios shaping the week.
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## U.S. Dollar Index (DXY): Range Holds, Eyes on the Fed
The U.S. Dollar Index (DXY) continues to trade within a broader consolidation phase. The greenback closed lower against major currencies last week, primarily due to softer U.S. economic data releases and dovish signals from the Federal Reserve. Despite this, the strength of the dollar during risk-off spikes and global uncertainty persists, forming a vital support for the index.
**Technical Overview:**
– The DXY remains in a broad range between 104.00 and 105.80, a consolidation pattern that has persisted since late May.
– The 105.10-105.20 region serves as immediate resistance, with clear downside anchored at 104.20.
– Weekly price action shows commitment from both bulls and bears, but neither side has broken the stalemate, signaling potential for sudden volatility if new economic catalysts emerge.
**Key Fundamental Drivers:**
– Last week’s weaker U.S. economic releases, including lower-than-expected Manufacturing PMI and cautious comments from Fed officials, have slightly weighed on the dollar.
– Recent inflation data has fueled expectations for rate cuts sometime in 2024, adding downward pressure.
– However, global risk sentiment and geopolitical uncertainty, particularly in Europe and Asia Pacific, have cushioned the dollar’s decline as a safe-haven asset.
**What to Watch This Week:**
– Federal Reserve Chair Jerome Powell’s testimony could shape short-term expectations around monetary policy. Any hawkish comments could reinforce resistance and revive bullish momentum.
– U.S. inflation figures and retail sales data will be monitored closely for any signs of persistent inflation, which could challenge rate cut expectations.
**Trading Plan:**
– Swing traders should prioritize short-term trades within the established range, buying near 104.20 support and selling near 105.20-105.80 resistance.
– A close above 105.80 or below 104.00 may signal a breakout and potential for a new trend phase.
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## EUR/USD: Bouncing from Support, Caution Ahead
After retracing significantly in recent weeks, EUR/USD found firm support at 1.0670 and staged a technical bounce. The pair’s performance hinges on monetary policy signals from both sides of the Atlantic and mounting political risks within the Eurozone.
**Technical Overview:**
– A strong support region persists at 1.0670-1.0700, from which last week’s relief bounce emerged.
– Immediate resistance appears at 1.0800, with secondary resistance at 1.0850, aligning with prior swing highs and trendline overlays.
– Short-term moving averages remain bearish, and the pair is still under the influence of broader downtrends on daily charts.
**Key Fundamental Drivers:**
– The euro remains vulnerable to European Central Bank (ECB) dovishness, especially after the ECB indicated its willingness to cut rates to support sluggish growth and tame inflation.
– French parliamentary elections have increased political uncertainty within the euro area, affecting euro sentiment.
– U.S. economic data continues to overshadow the euro, as divergent monetary policy expectations grow.
**Upcoming Data and Events:**
– Eurozone inflation and ZEW Economic Sentiment surveys will test the euro’s resolve. Weak data could reinforce the argument for rate cuts.
– Updates from French election cycles could add further volatility.
– U.S. data
Read more on GBP/USD trading.