**Weekly Forex Forecast for DXY, EUR/USD, GBP/USD, USD/JPY**
*Based on original analysis by Justin Bennett at Forex Factory*
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**Introduction**
The Forex market witnessed significant volatility last week, mainly driven by changing interest rate expectations, central bank commentary, and economic data. As markets prepare for the coming week, traders are closely tracking the U.S. Dollar Index (DXY), EUR/USD, GBP/USD, and USD/JPY for technical signals and trend shifts. This analysis explores the outlook for these major pairs, incorporating technical chart patterns and macroeconomic drivers.
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**U.S. Dollar Index (DXY): Key Levels and Outlook**
The U.S. Dollar Index, which measures the dollar against a basket of six major currencies, recently broke below a pivotal support zone, ushering in fresh bearish momentum. However, the broader outlook remains nuanced due to lingering uncertainty about Federal Reserve rate cuts and global risk sentiment.
**Last Week’s Performance**
– DXY broke below the 104.60 key support level.
– Sellers managed a daily close beneath both 104.60 and the multi-month trend line.
– The subsequent price action confirmed this as a valid breakdown after weeks of rangebound trading.
**Technical Analysis**
– The chart displays a clear descending consolidation channel since December 2023 highs.
– The failure to reclaim 104.60 confirms weakness.
– DXY closed Friday testing secondary support around the 104.00 handle.
**Market Drivers**
– Despite softening U.S. inflation data, Fed officials have signaled patience on rate cuts, which could underpin the dollar if global markets turn risk-averse.
– Concerns about geopolitics or global economic growth could bolster safe-haven bids for the dollar, supporting the index.
**Key Levels**
– Support: 104.00, followed by 103.40 region.
– Resistance: 104.60 (former support, now resistance), then the descending trend line.
**Outlook**
– A confirmed break and weekly close beneath 104.00 opens downside potential toward 103.40.
– Any reclaim of 104.60 would signal a possible reversal, warranting caution for dollar bears.
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**EUR/USD: Testing the Top of the Range**
The euro made notable gains last week, benefiting from dollar softness and retreating U.S. yields. However, the pair now faces a critical technical test at a major horizontal resistance.
**Last Week’s Performance**
– EUR/USD rallied toward the upper boundary of a multi-week range near 1.0890.
– The horizontal resistance at 1.0890-1.0900 has consistently capped advances since January.
**Technical Analysis**
– The daily chart reveals a well-established range between 1.0720 support and 1.0890/1.0900 resistance.
– The pair posted a strong bullish candle on Friday, closing just below the topside boundary.
**Market Drivers**
– Mixed ECB commentary has left traders unsure about the timing of a potential rate cut.
– Eurozone economic data has shown modest improvement, reducing downside risks in the near term.
**Key Levels**
– Resistance: 1.0890-1.0900 (key supply zone).
– Support: 1.0800 (short-term), then 1.0720 (range floor).
**Trading Scenarios**
1. **Bullish Breakout**
– A daily and weekly close above 1.0900 would confirm a breakout, opening upside potential toward 1.1000.
– Watch for increased momentum if buyers can decisively clear 1.0900.
2. **Range Continuation or Pullback**
– If 1.0900 holds as resistance, expect profit-taking and a possible retracement toward 1.0800 or 1.0720.
– Trend-followers may look to buy dips within the range or fade moves near the top.
**Outlook**
– The
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