EUR/USD and GBP/USD Price Forecast: Modest Gains on Strong UK GDP, With Focus on Upcoming US PPI

Highlights

• EUR/USD nudges up, closing at 1.09736; GBP/USD rises to 1.27628, as DXY sees marginal growth.
• ECB bulletin and negative Italian industrial data contrast with UK’s GDP beating projections.
• Upcoming French data and US PPI releases set to provide fresh market direction.

EUR and GBP Slightly Up as DXY Stalls; Mixed Economic Signals Ahead

Yesterday, the EUR/USD pair closed slightly up at 1.09736, showing a modest increase of 0.01% and GBP/USD also witnessed an uptick, closing at 1.27628, marking a rise of 0.16%. In parallel, the US Dollar Index (DXY) edged up by a minimal 0.01%, closing at 101.965.

In the Eurozone, the ECB Economic Bulletin was released alongside Italian Industrial Production data, which reported a more significant contraction than expected at -1.5%.

In the UK, key economic indicators like Housing Equity Withdrawal and GDP showed mixed trends. Notably, GDP outperformed expectations slightly, posting a 0.3% increase. The US economic data, featuring Core CPI and unemployment claims, indicated a stable inflation rate and a tight labor market.

Events Ahead

Looking ahead, the Eurozone awaits French Consumer Spending and Final CPI data, expected to show modest movements. The US calendar is marked by Core PPI and PPI data releases, which are anticipated to provide further insights into inflation trends and might influence the dollar’s movement.

No significant events are scheduled for the UK for rest of the day, leaving GBP/USD movements likely influenced by broader market sentiments.

US Dollar Index (DXY)

The Dollar Index is currently exhibiting a consolidation pattern, trading around the 102.276 level, as indicated by the flatlining near the 50 EMA (102.272). The 200 SMA (102.739) suggests a resistance point above. The Index’s recent performance shows a struggle to find direction, maintaining a close range without significant momentum. The convergence of the 50 and 200 EMA may suggest a potential bearish crossover, hinting at possible upcoming downward pressure.

EUR/USD Technical Forecast

The EUR/USD pair on Friday recorded a modest increase, trading at 1.09771, up by 0.04%. The pair’s pivot point stands at $1.0970, with immediate resistance levels at $1.1016, $1.1081, and $1.1137. Support is stronger at lower thresholds, specifically at $1.0898, $1.0828, and $1.0755.

The Relative Strength Index (RSI) is at 56, indicating a slightly bullish market sentiment. This is corroborated by the pair trading just above the 50-Day Exponential Moving Average (EMA) of $1.0968, suggesting a short-term upward trend.

An observed upward trendline, combined with the 50 EMA, supports a buying trend above the 1.0950 mark. Consequently, the EUR/USD outlook appears bullish above $1.0950, with potential to test higher resistance levels in the short term.

GBP/USD Technical Forecast

On January 12, the GBP/USD pair exhibited a slight uptick, trading at 1.27715, marking an increase of 0.09%. The pair’s pivot point is currently at $1.2733, with a series of resistance levels set at $1.2783, $1.2827, and $1.2877.

Conversely, support levels are identified at $1.2689, $1.2649, and $1.2608. The Relative Strength Index (RSI) stands at 59, suggesting a moderately bullish market sentiment.

This bullishness is further supported by the currency pair trading above its 50-Day Exponential Moving Average (EMA) of $1.2755. Recent chart patterns indicate that the Sterling has breached a symmetrical triangle pattern around the 1.27326 mark, reinforcing a bullish stance above this level.

Therefore, the short-term outlook for GBP/USD is bullish above $1.2730, with the potential to test higher resistance points in the coming sessions.