Title: Comprehensive Weekly Technical Outlook: DXY, EUR/USD, USD/JPY, USD/CAD, and Gold Forecast from Forex.com
Source: Original content adapted and expanded from BeritaSriwijaya.co.id and Forex.com’s weekly technical outlook
Written By: Richard Snow, DailyFX and Forex.com market analyst
As global economic uncertainty deepens amid persistent monetary concerns and shifting market sentiment, traders are watching key forex pairs and commodities to better understand what lies ahead. The week ahead promises volatility as the US Dollar Index (DXY), major currency pairs like EUR/USD, USD/JPY, USD/CAD, and the price of gold react to policy positions from the Federal Reserve and ongoing macroeconomic developments.
This extended technical outlook delves into critical price levels, chart patterns, and fundamental drivers currently shaping market activities.
US Dollar Index (DXY): Signs of Weakening Amid Fed Uncertainty
The US Dollar Index (DXY), a key gauge of the greenback against a basket of major currencies, continues to trade within a softening trend. A key observation this past week was the dollar’s inability to cement gains after a stronger-than-expected nonfarm payroll (NFP) print, which revealed tight labor market conditions.
Key Points:
– The DXY peaked around 104.70 following the jobs data but failed to sustain higher levels due to fading expectations of further Fed rate hikes.
– Continued moderation in inflation, particularly core PCE readings, suggests the Federal Reserve may stay on the sidelines longer, potentially cutting rates in the second half of 2024.
– Support near the 103.50 level remains in focus. A breach of this level could open downside targets toward the psychological 103.00 mark, and later, the 102.50 region.
Technical Indicators:
– The Relative Strength Index (RSI) shows diminishing bullish momentum, bouncing around the 50-neutral mark.
– The Dollar Index remains range-bound with no clear bullish breakout above the 105 mark.
Outlook: Neutral. Market participants will likely stay cautious with limited directional movement unless a surprise emerges from US CPI data or Fedspeak.
EUR/USD: Euro Attempts Stabilization Above 1.0800
The EUR/USD witnessed a rebound from sub-1.0800 levels, driven primarily by a weaker dollar rather than euro strength. The European Central Bank (ECB) remains dovish with its inflation expectations settling, setting the stage for potential rate cuts in Q3 2024.
Key Developments:
– Disinflation trends in the Eurozone suggest lesser urgency for ECB to maintain a tight monetary stance.
– ECB President Christine Lagarde mentioned ongoing challenges in wage inflation but didn’t rule out rate adjustments if conditions persist.
– The euro remains vulnerable to economic data, particularly PMIs and German industrial output figures due next week.
Critical Technical Levels:
– Support: 1.0780 and 1.0700
– Resistance: 1.0865 for immediate relief rally, followed by 1.0920
Momentum Indicators:
– RSI nearing overbought levels, indicating potential short-term consolidation.
– MACD signals a possible bullish crossover, hinting at short-term bullish interest.
Outlook: Cautiously Bullish. The pair could test higher, but gains may be capped if upcoming US inflation data surprises to the upside.
USD/JPY: Trading Near Multi-Decade Highs with Repatriation Risks
The USD/JPY remains closely watched as it hovers near multi-decade highs, stalling slightly below the 152.00 level. Yen weakness, a key driver of the pair, stems from Japan’s ultra-loose monetary policy contrasted against persistently high US yields.
Breakdown of Key Influences:
– Japanese authorities have been actively warning speculators about potential currency intervention if USD/JPY moves further into the 152 territory.
– The Bank of Japan (BoJ) recently raised rates for the first time in over a decade but reaffirmed a
Read more on USD/CAD trading.