EUR/USD, GBP/USD, DXY Price Forecast: Await Key Fed Decisions; Buy DXY Today?

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Published: Mar 19, 2024, 07:54 GMT+00:00

Key Points:

Dollar Index edges up, hinting at currency market volatility ahead of critical economic events.
EUR/USD dips slightly amid cautious trading, with pivotal European economic indicators on the horizon.
GBP/USD trends lower, with traders keenly watching UK CPI data for potential Bank of England cues.

Market Overview

The Dollar Index, witnessing an uptick that lays the groundwork for potential shifts in currency dynamics. Notably, the recent economic indicators present a diverse picture: the NAHB Housing Market Index slightly retreated to 51 from previous highs, while the Eurozone’s core CPI maintained a firm stance at 3.1% year-over-year, underscoring persistent inflation pressures.

Events Ahead

Key U.S. data, including Building Permits expected at 1.50M and Housing Starts forecasted at 1.43M, will provide insights into the housing market’s health. The TIC Long-Term Purchases, with an eye-catching figure of 95.5B potentially rising to 160.2B, will shed light on international investment flows.

All eyes, however, are trained on the Federal Reserve’s forthcoming decisions, particularly the Federal Funds Rate, currently anticipated to remain at 5.50%. The Fed’s economic projections and statements will be pivotal in setting the course for the dollar’s trajectory.

On the European front, EUR/USD traders await the German ZEW Economic Sentiment, expected at 20.6, and the broader Eurozone sentiment, forecasted at 25.4, for clues on economic sentiment. For the GBP/USD, the spotlight turns to the UK’s CPI year-over-year data, with expectations set at 3.5%, a critical measure of inflation likely influencing the Bank of England’s policy decisions.

US Dollar Index (DXY)

Dollar Index

The Dollar Index (DXY) witnessed a slight uptick, increasing by 0.19% to 103.773, as market participants adjust positions ahead of critical economic releases and central bank meetings. The index is currently trading above the pivot point at 103.651, suggesting a bullish sentiment with potential resistance at 103.932, 104.295, and 104.615.

Support levels are identified at 103.322, 103.062, and 102.733, which could provide a safety net against any downward movement. The 50-Day and 200-Day Exponential Moving Averages, standing at 103.367 and 103.422 respectively, underline a cautiously optimistic outlook.

The trend remains bullish above 103.651, but a dip below this threshold could signal a broader market reevaluation.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair modestly declined by 0.08% to 1.08624, navigating the forex landscape with caution as traders eye pivotal economic indicators and central bank policies. Positioned slightly below the pivot point at 1.08735, the currency pair encounters resistance at 1.09036, 1.09298, and 1.09639, which could temper any bullish momentum.

Conversely, support levels at 1.08443, 1.08206, and 1.07996 provide potential buffers against further dips. The 50-Day and 200-Day Exponential Moving Averages, at 1.08929 and 1.08803 respectively, hint at a tight market.

Presently, the EUR/USD shows a bearish inclination below 1.08735, yet surpassing this critical juncture could pivot the bias towards bullish territory.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

The GBP/USD pair witnessed a decline of 0.19%, trading at 1.27056. It’s navigating a cautious path in the forex market, slightly below its pivot point of 1.27332. Facing resistance at 1.27688, 1.28241, and 1.28643, any bullish momentum appears constrained.

Conversely, support at 1.26919, followed by 1.26556 and 1.26007, marks critical junctures against further downturns. With the 50-Day EMA at 1.27472 and the 200-Day EMA closely trailing at 1.27319, the market sentiment seems finely balanced.

Currently, the trend leans bearish below the pivotal 1.27332 level, but surpassing this threshold could signal a shift towards bullish optimism.

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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