Weekly Forex Forecast: DXY, EUR/USD, GBP/USD, and USD/JPY
Original Article by James Stanley | Source: Forex Factory
As we head into the final week of June 2024, markets are closely monitoring pivotal technical and economic setups that may shape the next cycle in currency movements. The US Dollar Index (DXY), EUR/USD, GBP/USD, and USD/JPY present crucial signals, influenced by central bank policies, economic data, and technical trends. With key inflation indicators and GDP figures scheduled in the days ahead, traders have their eyes on reversals, breakouts, and emerging momentum across major pairs.
This week’s forecast focuses on interpreting technical structures while incorporating recent fundamental themes. Here’s a detailed analysis and outlook for the DXY, EUR/USD, GBP/USD, and USD/JPY currency pairs.
US Dollar Index (DXY) Technical Analysis
The US Dollar enjoyed a strong performance through the first five months of 2024 — fueled by the Federal Reserve’s hawkish policy stance, strong labor data, and persistent inflation pressures. Despite a pullback in early June following a weak CPI report, the greenback has generally remained in a bullish posture. The key question now centers on whether this pause represents a longer-term reversal or simply a correction within the upward trend.
Highlights:
– The weekly DXY chart shows sustained optimism for bulls over the past year, particularly from July 2023 onwards. Since then, the index has posted steady gains, although its recent behavior suggests rising resistance near the 106.00 handle.
– The long-term trendline from the 2021 low continues to guide the advance, with last week’s candle finding support around the trendline before bouncing higher, signaling bullish defense.
– On the daily chart, a possible inverted head-and-shoulders pattern is forming:
– Left shoulder: May 14 low
– Head: June 4 low at approximately 103.99
– Right shoulder: Potentially formed around 105.10
– Neckline resistance: 105.78 — a breakout here may lead to a retest of 106.51 or even 107.00
– RSI (Relative Strength Index) is holding toward neutral territory, indicating potential for further upside without signaling an overbought environment.
Key Levels to Watch:
– Resistance:
– 105.78 (neckline of potential inverted H&S)
– 106.51 (April swing high)
– 107.00 (psychological barrier)
– Support:
– 104.85 (last week’s swing low)
– 104.23 (long-term uptrend support)
– 103.99 (June low; invalidation of bullish structure below here)
Outlook: Bullish bias remains intact as long as the 103.99 support holds. Upside break of 105.78 may trigger renewed buying momentum.
EUR/USD Technical Analysis
The Euro has struggled to maintain consistency, fluctuating in large part due to diverging monetary policies between the ECB and the Federal Reserve. The European Central Bank recently cut rates, emphasizing its dovish approach, while the Fed has stayed cautious in easing its policy amid persistent inflation.
Highlights:
– Weekly chart reveals a significant trend shift. EUR/USD reversed lower after a rejection from the 1.0900 zone in early June, signaling a return of bearish pressure.
– A bearish engulfing candlestick on the weekly chart formed between June 10–14 suggests growing downside risk.
– On the daily time frame, short-term support recently emerged around 1.0670, but price action remains below the 200-day simple moving average, and the downward-sloping resistance trendline remains dominant.
– The setup may be evolving into a longer-term descending triangle, fueled by lower highs and consistent support around 1.0670.
Technical Outlook:
– Below 1.0670, potential targets include:
– 1.060
Explore this further here: USD/JPY trading.