**Weekly Forex Forecast for DXY, EUR/USD, GBP/USD, and USD/JPY**
*Based on the analysis by Justin Bennett of Daily Price Action via Forex Factory.*
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The forex market experienced heightened volatility last week, with major currency pairs making decisive moves as the Federal Reserve, European Central Bank (ECB), and Bank of England (BoE) all signaled that rate cuts are not imminent. As investors adjust their expectations on monetary policy trajectories, the US Dollar Index (DXY), Euro (EUR/USD), British Pound (GBP/USD), and Japanese Yen (USD/JPY) pairs are at pivotal levels for the upcoming week.
This in-depth forecast, synthesized from the analysis by Justin Bennett for Forex Factory, will break down price action, potential scenarios, and key technical areas for each forex pair. Paying attention to these setups and market drivers should assist traders in their decision-making through the week.
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## US Dollar Index (DXY) Weekly Forecast
The DXY decisively reclaimed the 105.00 handle last week, bolstered by a series of hawkish central bank meetings revealing that major policymakers are not in a hurry to lower rates. The relative strength of the US economy, along with sticky inflation data, further reinforced dollar demand.
### Key Technical Levels and Price Action
– **105.00 Support**: After weeks of sideways movement, DXY surged above 105.00, retesting this area as new support. This level now serves as a crucial floor for the bulls.
– **106.00-106.50 Resistance**: The 106.00-106.50 region represents a zone where sellers previously stepped in. The DXY will need to clear and hold above this area to confirm a sustainable bullish breakout.
– **Breakout Structure**: The mid-range breakout and subsequent higher close on the weekly chart set the stage for potential follow-through buying pressure if the US dollar continues to attract flows.
### Price Drivers
– **FOMC Minutes and Fed Speeches**: The Fed’s recent message is that policy remains “data dependent,” but with rate cuts looking less likely for the near-term, traders will monitor speeches and data that could tilt sentiment.
– **US Economic Data**: Inflation readings, labor statistics, and PMI releases will serve as catalysts. Robust data supports continued dollar strength.
### Scenarios for the Week
– **Bullish Continuation**: If the DXY holds above 105.00, the next logical target is the 106.00-106.50 resistance. A close beyond this may set up a move toward the 107.00 area.
– **False Breakout/Correction**: Failure to sustain the 105.00 level or a rejection at 106.00-106.50 could spark a return to the prior range between 104.00 and 105.00.
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## EUR/USD Weekly Forecast
EUR/USD witnessed a notable decline last week as the euro came under pressure following a dovish hold from the ECB. Despite leaving rates unchanged, the ECB emphasized that inflation is falling and hinted at possible easing later this year unless conditions change materially. The euro’s technical picture now looks vulnerable.
### Key Technical Levels and Price Action
– **1.0800-1.0830 Resistance**: Last week’s sharp decline returned the pair below the 1.0800 area. The 1.0800-1.0830 zone is now a key resistance zone for any rebound attempts.
– **1.0700 Support**: The next prominent support sits at 1.0700, which aligns with previous swing lows. A breakdown could open the door for further weakness.
– **Bearish Engulfing Weekly Candle**: The outsized red weekly candle signals renewed selling momentum, particularly if the pair continues making lower highs.
### Price Drivers
– **ECB Communication**: Euro bears will watch for further signals from ECB members on the likelihood and timing of
Read more on GBP/USD trading.