**Weekly Forex Forecast for DXY, EUR/USD, GBP/USD, and USD/JPY**
*Adapted from analysis by Fawad Razaqzada, originally published on Forex Factory*
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**Overview**
The foreign exchange (forex) market started the past week with broad US Dollar (USD) strength, carrying momentum from a resolutely hawkish Federal Reserve at its June policy meeting. However, as the days unfolded, that narrative shifted. Mixed economic data and subtle signals from policymakers saw the greenback pare gains while risk sentiment improved. As we approach a new trading week, market participants await critical economic releases and central bank developments, which could determine the near-term direction across major currency pairs.
This article provides a comprehensive outlook for the US Dollar Index (DXY), EUR/USD, GBP/USD, and USD/JPY, examining recent price action, fundamental drivers, and technical setups to help traders navigate the week ahead.
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## US Dollar Index (DXY): Navigating Policy Signals and Data
### Key Drivers
– **Monetary Policy:**
The Federal Reserve held steady on rates at its latest meeting but projected only one rate cut before year-end. This more hawkish-than-expected dot plot initially underscored dollar strength.
– **Economic Data:**
US retail sales, manufacturing indices, and jobless claims last week painted a mixed, somewhat softer macro picture, undermining the dollar’s short-term momentum.
– **Market Sentiment:**
The latter half of the week saw improved risk appetite in global markets. This is typically a headwind for USD, which acts as a safe-haven during risk-off periods.
### Technical Analysis
– **Weekly Structure:**
The DXY set a weekly high around 105.80 before reversing sharply. Price remains rangebound between 104.00 and 106.00, with key resistance and support marking the boundaries.
– **Support & Resistance Levels:**
– Resistance: 105.60/80, then 106.00
– Support: 104.80 (broken prior range top), then deeper at 104.00
– **Momentum Signals:**
Daily momentum indicators like RSI show the dollar pulling back from overbought territory. A close below 104.80 would raise the odds of a retest at 104.00 and possibly below.
### Outlook
The short-term outlook for the dollar index is neutral to mildly negative as markets continue to reprice Fed expectations and react to incoming US economic data. Any hints of economic slowdown or dovish Fed speak could prompt more DXY losses. Conversely, firmer data or renewed geopolitical jitters may revive USD’s bid.
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## EUR/USD: Eyeing a Return Toward 1.0800
### Key Drivers
– **ECB Policy Stance:**
The European Central Bank delivered its long-telegraphed rate cut earlier this month but left the door open for a cautious, gradual easing cycle. The divergence with a less dovish Fed has weighed on EUR/USD.
– **Political Uncertainty:**
French political tensions and the reaction to EU parliamentary results sparked volatility and initial euro losses, but markets have since stabilized somewhat.
– **Macro Data:**
Eurozone data remains uneven, with Germany especially continuing to struggle. However, signs of stabilization or improvement could support the common currency.
### Technical Analysis
– **Price Action:**
EUR/USD fell to lows near 1.0675 before rebounding sharply mid-week. The pair managed to reclaim the 1.0700 handle and briefly poke above 1.0750.
– **Support & Resistance:**
– Support: 1.0700 (psychological), 1.0675 (recent low)
– Resistance: 1.0785/1.0800 (double top formation), then 1.0850
– **Momentum:**
The bounce off
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