EUR/USD, GBP/USD, DXY Forecast: Dollar Strength at 104.60 Before Fed Speeches

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Updated: Jun 2, 2024, 10:21 GMT+00:00

Key Points:

Mester's speech bolsters the dollar, emphasizing inflation risks and dismissing rate cut talks.
German PPI up 0.2%, Lagarde's speech, and current account surplus support the euro.
Multiple FOMC members' speeches tonight could influence US dollar direction and market sentiment.

EUR/USD, GBP/USD, DXY Forecast: Dollar Strength at 104.60 Before Fed Speeches

Market Overview

On Tuesday, the forex market started with FOMC Member Mester’s speech at 2:00 am, setting the tone for the US Dollar. Mester emphasized that inflation risks are tilted to the upside and dismissed the idea of a potential rate cut, stating, “I don’t think about potential rate cut in terms of when.” This hawkish stance bolstered the dollar early in the day.

The German Producer Price Index (PPI) reported a 0.2% increase at 2:00 pm, matching expectations but slightly below the previous 0.3%, creating mild volatility in the EUR/USD. ECB President Lagarde’s speech at 4:00 pm, along with the release of the Eurozone’s current account surplus of €30.2 billion, provided moderate support to the euro.

Later, US Treasury Secretary Yellen’s remarks at 5:00 pm influenced market sentiment, followed by the Eurozone trade balance report showing a surplus of €19.9 billion, better than expected. The GBP/USD was impacted by the UK’s CBI Industrial Order Expectations, which improved to -20 from -23.

Events Ahead

As the evening progressed, speeches from multiple FOMC members, including Waller, Barkin, Williams, Bostic, and Barr, created a flurry of activity. Their comments were closely monitored for hints on future monetary policy, affecting the US dollar.

US Dollar Index (DXY)

Dollar Index

The Dollar Index is trading at $104.601, up 0.01%. Key technical levels include a pivot point at $104.595. Immediate resistance is at $104.763, followed by $104.920 and $105.071. Immediate support is at $104.402, with further support at $104.258 and $104.072.

The 50-day EMA stands at $104.632, while the 200-day EMA is at $105.057. The index is bearish below the pivot point of $104.595. A break above this level could boost a bullish trend.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD is trading at $1.0858, up 0.02%. Key technical levels include a pivot point at $1.08508. Immediate resistance is at $1.08712, followed by $1.08812 and $1.08950. Immediate support is at $1.08360, with further support at $1.08219 and $1.08076.

The 50-day EMA stands at $1.08540, while the 200-day EMA is at $1.07952. The pair has shown a bullish bias above the pivot point of $1.08508. A break below this level could lead to a sharp selling trend.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: TradingView

The GBP/USD is trading at $1.2708, up 0.03%. Key technical levels include a pivot point at $1.2700. Immediate resistance is at $1.2735, followed by $1.2765 and $1.2792. Immediate support is at $1.2656, with further support at $1.2628 and $1.2605.

The 50-day EMA stands at $1.2671, while the 200-day EMA is at $1.2587. The pair maintains a bullish bias above the pivot point of $1.2700. A break below this level could trigger a sharp selling trend.

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

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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