EUR/USD, GBP/USD, DXY Forecast: DXY Bounces Above $104; More Bullish Correction Ahead?

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Updated: Jun 2, 2024, 10:22 GMT+00:00

Key Points:

Core CPI rose by 0.3% m/m, meeting expectations but down from the previous 0.4%.
Unemployment Claims expected at 219K, down from 231K while Philly Fed Manufacturing Index projected to rise to 7.7 from 15.5.
Dollar Index trading at $104.324, down 0.08% with key support at $104.078; immediate resistance at $104.601.

EUR/USD, GBP/USD, DXY Forecast: DXY Bounces Above $104; More Bullish Correction Ahead?

Market Overview

The Core Consumer Price Index (CPI) rose by 0.3% month-over-month (m/m), matching expectations but down from the previous 0.4%. Core Retail Sales increased by 0.2% m/m, also in line with forecasts but below the previous 0.9%.

The broader CPI rose 0.3% m/m, in line with expectations, and 3.4% year-over-year (YoY), slightly lower than the previous 3.5%. The Empire State Manufacturing Index showed a steep decline to -15.6, worse than the expected -9.9. Retail Sales were flat at 0.0% m/m, missing the forecasted 0.4%.

On the European front, French Final CPI was stable at 0.5% m/m. The Eurozone’s Flash Employment Change and Flash GDP both met expectations at 0.3% quarter-over-quarter (q/q). Industrial Production rose by 0.6% m/m, slightly above the expected 0.5%. For the UK, the 10-year bond auction yielded 4.07%, indicating rising borrowing costs compared to the previous auction’s yield of 3.5%.

Events Ahead

Unemployment Claims are expected to be 219K, down from the previous 231K. Building Permits are forecasted at 1.48 million, up from 1.46 million. The Philly Fed Manufacturing Index is projected to increase to 7.7 from 15.5. Housing Starts are expected to rise to 1.42 million from 1.32 million. Import Prices are forecasted to grow by 0.2% m/m, down from 0.4%.

Industrial Production is anticipated to increase by 0.1% m/m, down from 0.4%, and the Capacity Utilization Rate is expected to remain steady at 78.4%.

In Europe, the ECB Financial Stability Review, Italian Trade Balance, and EU Economic Forecasts are scheduled. The Italian Trade Balance is forecasted to be 6.03 billion euros, up from 4.77 billion euros. In the UK, market participants will be attentive to a speech by MPC Member Greene.

US Dollar Index (DXY)

Dollar Index

The Dollar Index is trading at $104.324, down 0.08%. Key price levels to watch include a pivot point at $104.078. Immediate resistance levels are at $104.601, $104.920, and $105.141. On the support side, immediate levels are at $103.886, $103.644, and $103.376.

Technical indicators show mixed signals. The 50-day Exponential Moving Average (EMA) is at $105.111, and the 200-day EMA is at $105.173, suggesting potential resistance. The index is likely to remain bullish above the pivot point at $104.078.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

EUR/USD is trading at $1.08751, down 0.01%. Key price levels to watch include a pivot point at $1.08945. Immediate resistance levels are at $1.09195, $1.09430, and $1.09644. On the support side, immediate levels are at $1.08652, $1.08454, and $1.08313.

Technical indicators show mixed signals. The 50-day Exponential Moving Average (EMA) is at $1.07943, and the 200-day EMA is at $1.07626, suggesting a potential bullish trend. However, the pair is likely to remains bearish below the pivot point at $1.08945.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: TradingView

GBP/USD is trading at $1.26748, down 0.02%. Key price levels to watch include a pivot point at $1.27009. Immediate resistance levels are at $1.27349, $1.27646, and $1.28030. On the support side, immediate levels are at $1.26552, $1.26277, and $1.25821.

Technical indicators present mixed signals. The 50-day Exponential Moving Average (EMA) is at $1.25683, and the 200-day EMA is at $1.25512, suggesting a potential bullish trend. However, the pair remains bearish below the pivot point at $1.27009.

In conclusion, GBP/USD is bearish below $1.27009. A break above this level could enhance bullish momentum, while staying below it may lead to further bearish pressure.

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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