EUR/USD, GBP/USD, DXY Price Forecast: DXY Dips Below 106; Market Correction Ahead?

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Published: Apr 24, 2024, 07:39 GMT+00:00

Key Points:

EUR/USD sees slight uptick with PMI improvement; GBP/USD benefits from strong services sector growth.
Upcoming economic indicators like the German ifo Business Climate Index critical for Euro's path.
GBP/USD stability above pivot point of 1.2419 key to maintaining its current upward trajectory.

EUR/USD, GBP/USD, DXY Price Forecast: DXY Dips Below 106; Market Correction Ahead?

Market Overview

For EUR/USD, the latest PMI data from Europe showed German Flash Manufacturing PMI at 42.2, a slight improvement from 41.9, yet indicating ongoing contraction in the sector. The German Flash Services PMI also rose to 53.3 from 50.6, reflecting some resilience in the service sector despite broader economic challenges.

For GBP/USD, the UK’s Flash Manufacturing PMI held steady at 50.3, suggesting stagnant sectoral growth. Conversely, the Services PMI experienced a significant increase to 54.9 from 53.0, indicating robust expansion, which could influence the monetary policy direction of the Bank of England.

Events Ahead

For EUR/USD, market participants are eyeing the German ifo Business Climate Index, expected at 88.9, up from 87.8, and a German 10-year Bond Auction with a yield forecast of 2.38%, previously 2.0%. These indicators will shed light on business sentiment and fiscal health in Europe.

For GBP/USD, the focus will shift to the UK’s CBI Industrial Order Expectations, anticipated at -16, slightly improved from -18, providing insights into the industrial outlook.

US Dollar Index (DXY)

Dollar Index

The Dollar Index today remains stable at 105.687 having a pivot point set at 105.927, which could dictate the future course. The Dollar Index faces immediate resistance at 106.536, with further hurdles at 107.097 and 107.608 potentially capping any upward moves. On the downside, initial support lies at 105.537, with subsequent levels at 105.221 and 104.901, which could provide fallback positions if the index starts to retreat.

The 50-Day Exponential Moving Average (EMA) is currently at 105.837, slightly above today’s level, indicating mild resistance. Meanwhile, the 200-Day EMA at 104.888 offers a broader support base below the current index level. The technical perspective suggests the Dollar Index might lean towards bearishness below its pivot of 105.927.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair modestly increased by 0.01% today, now trading at 1.07031. The currency pair hovers near its pivot point at 1.0704, which is instrumental in determining its short-term direction.

Immediate resistance for the EUR/USD stands at 1.0766, followed by 1.0793 and 1.0835. These levels could restrict upward movements. Conversely, support is observed at 1.0666, with deeper levels at 1.0603 and 1.0548 that could stabilize declines.

The 50-Day Exponential Moving Average (EMA) is currently at 1.0681, suggesting some support below today’s price. The 200-Day EMA at 1.0762 indicates potential resistance. The EUR/USD shows a potential for bullish behavior above 1.0704.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

The GBP/USD pair edged up slightly by 0.04%, currently trading at 1.2455. The exchange rate is just above its pivot point of 1.2419, which serves as a critical indicator for future price movements.

The pair encounters immediate resistance at 1.2487, with subsequent thresholds at 1.2569 and 1.2641. These levels could act as ceilings to further advances. On the downside, the support levels are marked at 1.2367, 1.2302, and 1.2225, potentially providing bounce points should the pair retreat.

The 50-Day Exponential Moving Average (EMA) at 1.2445 offers near support, closely aligning with today’s price, while the 200-Day EMA at 1.2565 poses a longer-term resistance level. The GBP/USD outlook remains positive as long as it stays above 1.2419.

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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