Weekly Forex Forecast for DXY, EUR/USD, GBP/USD, and NZD/USD
Original article by Justin Bennett, sourced from ForexFactory.com
As forex traders look ahead into another week of trading, the US Dollar Index (DXY) and several major currency pairs, including EUR/USD, GBP/USD, and NZD/USD, provide critical insights into potential market movements. The following analysis, based on the original work by Justin Bennett on ForexFactory.com, outlines technical patterns, support and resistance zones, market sentiment, and the implications of recent price action.
U.S. Dollar Index (DXY) Outlook
The US Dollar Index (DXY) closed last week under pressure with sellers reclaiming the 105.00 level. The market faced difficulties pushing above this psychological resistance after multiple attempts, suggesting heightened seller interest in this area.
Key Technical Observations:
– The DXY finished last week below the 105.05 resistance level. This level was previously acting as support and the market’s failure to close above it suggests the level may now act as a resistance barrier moving forward.
– The next critical support area is found near 104.20, a region that has held several times in the past as buyers stepped in.
– A decisive break below 104.20 would expose the 103.60 area, a level the DXY last tested during mid-April.
Price Action Summary:
– Bulls attempted to hold the 105.05 area early in the week but lacked the momentum to sustain a move above it.
– Friday’s close below this level increases the likelihood of continued bearish pressure, with the next test likely around the 104.20 handle.
– If this level breaks decisively and sellers maintain control, the DXY could revisit the March and April lows around 103.60.
Outlook Summary:
– Near-term bias is bearish as long as the price stays below 105.05.
– A daily close above this level would negate the bearish setup and potentially shift momentum back toward the bulls.
– Watch for a potential bounce near 104.20 before initiating short-term trades.
EUR/USD Forecast
The EUR/USD showed resilience last week, bouncing from support around 1.0720 and eventually reclaiming higher levels. The pair responded to the weakening dollar with a technical rebound that may continue unless faced with strong resistance.
Key Support and Resistance Levels:
– Support lies near 1.0720, a level where buyers have historically defended positions.
– Resistance is seen near 1.0880, an area that played a pivotal role in price action during April.
– A break above 1.0880 would pave the way toward the March 2024 high at approximately 1.0980.
Technical Overview:
– The pair formed a higher low during the back half of last week, in line with the broader bullish trendline that developed since the April lows.
– Friday’s close placed the pair just below the 1.0800 handle, a level of psychological and technical significance.
– Momentum indicators, such as the Relative Strength Index (RSI), currently support further upside but are not yet in overbought territory.
Price Action Notes:
– Bulls established firm control in the latter half of last week with higher highs and higher lows forming on the daily chart.
– With the DXY under pressure, the EUR/USD may be poised to continue its upward trend unless halted at the 1.0880 resistance level.
– Note, however, that a rejection at 1.0800 followed by a break back below 1.0720 would invalidate upside momentum and potentially signal bearish continuation.
Outlook Summary:
– Short-term bias is bullish above 1.0720 with a primary target at 1.0880 and secondary resistance near 1.0980.
– A daily close below 1.0720 would reintroduce bearish risks with potential for a drop toward 1.0650.
– Price action within the 1.
Explore this further here: USD/JPY trading.