EUR/USD, GBP/USD, DXY Forecast: DXY Drops Below $104.50; More Sell-off Ahead?

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Published: May 28, 2024, 07:11 GMT+00:00

Key Points:

The German Ifo Business Climate Index dropped to 89.3, impacting EUR/USD, now at $1.08767.
The Dollar Index (DXY) fell 0.16% to $104.44 amid mixed economic signals.
UK CBI Realized Sales are expected to improve, potentially supporting GBP/USD at $1.27756.

EUR/USD, GBP/USD, DXY Forecast: DXY Drops Below $104.50; More Sell-off Ahead?

In this article:

Market Overview

The German Ifo Business Climate Index came in at 89.3, below the previous 90.4, indicating weaker business sentiment, which has weighed on the EUR/USD. The pair is trading at $1.08767, up 0.20% despite the disappointing data, likely due to the broader market’s risk appetite and a softer US dollar.

Meanwhile, the Dollar Index (DXY) is at $104.44, down 0.16%, reflecting a decline in the greenback’s strength amid mixed economic signals.

Events Ahead

Looking ahead, FOMC members Bowman and Mester are scheduled to speak early in the morning, followed by German Wholesale Price Index (WPI) data, which is expected to rise by 0.4% month-on-month.

In the UK, the CBI Realized Sales figures are anticipated to improve to -24 from -44, potentially providing support for the GBP/USD, which is currently trading at $1.27756, up 0.10%.

In the US, significant data releases include the S&P/CS Composite-20 HPI year-on-year, forecasted to hold steady at 7.3%, and the CB Consumer Confidence Index, expected to dip slightly to 96.0 from 97.0.

Additionally, FOMC members Cook and Daly will speak later in the day, providing further insights into the Federal Reserve’s monetary policy outlook.

US Dollar Index (DXY)

Dollar – Chart

The Dollar Index (DXY) is trading at $104.445, down 0.16% on the 4-hour chart. The pivot point, marked at $104.538, is essential for determining market direction. Immediate resistance levels are at $104.690, $104.857, and $105.057. On the downside, immediate support is observed at $104.389, followed by $104.251 and $104.082.

The 50-day Exponential Moving Average (EMA) is positioned at $104.755, and the 200-day EMA is at $104.979, indicating a bearish trend as the current price is below these levels.

The outlook for the Dollar Index remains bearish below the pivot point of $104.538, with a break above this level potentially boosting bullish momentum.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

EUR/USD is trading at $1.08767, up 0.20% on the 4-hour chart. The pivot point, marked at $1.08646, is crucial for determining market direction. Immediate resistance levels are identified at $1.08850, $1.09045, and $1.09262.

On the downside, immediate support is observed at $1.08408, followed by $1.08235 and $1.08044. The 50-day Exponential Moving Average (EMA) is positioned at $1.08413, while the 200-day EMA stands at $1.07961, both indicating bullish momentum as the current price is above these levels.

The outlook for EUR/USD remains bullish above the pivot point of $1.08646, with a break below this level potentially leading to a sharp selling trend.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: TradingView

GBP/USD is trading at $1.27756, up 0.10% on the 4-hour chart. The pivot point at $1.27619 is crucial for market direction. Immediate resistance levels are at $1.27930, $1.28236, and $1.28637.

On the downside, immediate support is at $1.27178, followed by $1.26744 and $1.26448. The 50-day Exponential Moving Average (EMA) is positioned at $1.27046, while the 200-day EMA is at $1.26147, indicating bullish momentum as the current price is above these levels.

The outlook for GBP/USD remains bullish above the pivot point of $1.27619. A break below this level could potentially lead to a sharp selling trend.

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

About the Author

Arslan AliTechnical Analysis Expert

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.