Original article by Justin Bennett via ForexFactory
Title: Weekly Forecast for DXY, EUR/USD, GBP/USD, USD/JPY, and Gold – June 10 to 14, 2024
Overview
Global forex markets are setting up for a volatile week, with multiple major events on the calendar. Notably, traders await the U.S. Federal Reserve’s June FOMC meeting and key inflation developments in the form of CPI data. These events follow the European Central Bank (ECB) rate decision and a surprisingly strong U.S. jobs report. With currency pairs across the board approaching critical technical levels, this week’s developments are likely to shape the medium-term market direction across the forex landscape.
Traders will focus on the Federal Reserve’s interest rate outlook amid persistent inflation and strong employment metrics following last week’s Non-Farm Payroll (NFP) surge. Meanwhile, the euro is on fragile footing after the ECB cut rates for the first time this cycle but refrained from signaling an aggressive easing path. Gold also saw minor relief as U.S. yields retraced from their recent highs.
This article reviews the weekly technical and fundamental outlook for five major instruments:
– U.S. Dollar Index (DXY)
– EUR/USD
– GBP/USD
– USD/JPY
– Gold (XAU/USD)
US Dollar Index (DXY)
The U.S. Dollar Index (DXY) continues to consolidate within a sideways structure, showing signs of growing momentum as investors reposition ahead of the Fed’s June policy update.
Key insights:
– DXY spent the last week moving between 104.00 and 105.50 after hitting resistance just above the highs from early May.
– Last Friday’s NFP data lifted the dollar as payrolls beat expectations with a gain of 272,000 jobs, weakening the market’s case for a Fed rate cut in July.
– The 105.50 region acts as the primary resistance zone. A clean daily or weekly close above this level would reinforce bullish sentiment.
– On the downside, short-term support lies near 104.40, with further key support around 103.90 if the bearish sentiment strengthens.
With CPI data on Wednesday followed by the FOMC decision, a break from consolidation appears imminent. If inflation runs hotter than expected, DXY could extend its upward breakout toward 106.50.
EUR/USD
The euro broke below a critical support region last week following the ECB’s interest rate decision and the release of upbeat U.S. economic data. The ECB lowered its benchmark rate by 25 basis points but offered minimal guidance for future cuts, citing lingering inflation concerns.
Technical breakdown:
– EUR/USD dropped below the key 1.0800–1.0780 support area, which previously provided a stopping point for sellers throughout May.
– The breach of this region, particularly with Friday’s strong follow-through to around 1.0760, marks a short-term breakdown.
– Immediate resistance now rests at the former support zone (1.0780–1.0800). If EUR/USD cannot regain this area, further declines are likely.
– Next downside targets include 1.0710 and the larger swing level at 1.0650.
Fundamentally, the euro faces pressure from diverging monetary policies. The Fed is holding interest rates steady while the ECB has already started cutting, creating macro pressure for more euro weakness against the dollar if these trends persist.
This week’s CPI and Fed statement will be pivotal in determining whether EUR/USD can reclaim lost ground or is headed toward a deeper retracement.
GBP/USD
Sterling remains range-bound but is showing signs of weakening after failing to sustain gains above 1.2800. The U.K. economic outlook remains modest, and the Bank of England (BoE) has been more dovish compared to the Fed, creating downside risk for the pound.
Technical factors:
– GBP/USD failed to maintain a breakout above 1.2800 last week and ret
Explore this further here: USD/JPY trading.