EUR/USD and GBP/USD Price Forecast: Focus on ECB Policy and US GDP Amid Market Fluctuations

Highlights

• Dollar Index stable at 102.890 as markets await US GDP, ECB policy; traders cautious.
• Eurozone PMI data mixed: France and Germany show contraction, broader Eurozone faces challenges.
• GBP/USD slightly up, supported by stronger Services PMI; technicals indicate potential bullish trend.

Dollar Index Steady as Markets Await US GDP and ECB Policy

On Thursday, the Dollar Index (DXY) is trading at 102.890, remaining mostly steady, as forex traders show hesitancy in taking positions ahead of the US GDP and ECB’s monetary policy decision.

In the Eurozone, recent PMI data presents a varied economic landscape. France’s Flash Manufacturing PMI at 43.2 and Services PMI at 45.0 suggest a contracting economy.

Germany mirrors this trend with its Manufacturing PMI at 45.4 and Services PMI at 47.6. The broader Eurozone Manufacturing PMI stands at 46.6, and Services PMI at 48.4, indicating ongoing challenges.

For the GBP, the Flash Manufacturing PMI reads at 47.3, while the Services PMI is more encouraging at 53.8. This data suggests a divergence in sectoral performance, with services outpacing manufacturing.

Events Ahead

The day ahead is packed with events that could sway currency markets. The German ifo Business Climate index, ECB’s refinancing rate, monetary policy statement, and press conference are critical for the EUR.

During the US session, focus will be particularly on the U.S. Advance GDP, which is anticipated at 2.0%, marking a slowdown from the previous 4.9%. These will likely shape the short-term trajectories of EUR/USD and GBP/USD.

US Dollar Index (DXY)

The US Dollar Index is stable at 103.282, closely hovering around the pivot point of 103.148. It faces resistance at 103.823, 104.196, and 104.553, while support lies at 102.734, 102.302, and 101.920. The index’s alignment near the 50-Day and 200-Day EMAs suggests a balanced sentiment. Currently, the trend appears cautiously bullish above the pivot, but overall market signals remain mixed, awaiting further developments.

EUR/USD Technical Forecast

As of January 25, the EUR/USD is experiencing a slight uptick, trading at 1.08854, marking a 0.04% increase. The currency pair orbits a pivot point at 1.09074, indicative of a potential shift in market direction.

Resistance levels are poised at 1.09528, 1.09939, and 1.10383, creating ceilings that may restrain any bullish momentum. Support levels, conversely, lie at 1.08531, 1.08209, and 1.07723, offering potential buffers against downward movements.

The pair’s positioning below both the 50-Day and 200-Day Exponential Moving Averages, at 1.08959 and 1.09073 respectively, suggests a bearish undertone. However, a morning star pattern on the 4-hour chart hints at possible buying interest.

Overall, the EUR/USD trend appears cautiously optimistic above 1.0870, yet remains susceptible to shifts influenced by external market factors and technical indicators.

GBP/USD Technical Forecast

On January 25, the GBP/USD pair saw a slight increase of 0.02%, trading at 1.27219. Currently hovering around the pivot point at 1.27031, the pair shows potential for further movement. The key resistance levels are set at 1.27469, 1.27844, and 1.28198, marking potential barriers for upward price action.

On the downside, support can be found at 1.26496, followed by 1.26249 and 1.25964, which could offer a buffer against any declines. Technical analysis reveals that the GBP/USD is garnering support near the 50-Day Exponential Moving Average (EMA) of 1.27080, slightly above the 200-Day EMA of 1.26652.

Notably, the pair has formed a morning star candlestick pattern on the four-hour timeframe, suggesting a bullish trend may be on the horizon, particularly if it stays above the pivot point. In conclusion, the technical outlook for GBP/USD appears to be bullish above the pivot point of $1.27031.

For a look at all of today’s economic events, check out our economic calendar.