EUR/USD, GBP/USD, DXY Price Forecast: DXY Holds $104; Expect a Rebound?

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Published: Aug 1, 2024, 07:33 GMT+00:00

Key Points:

Eurozone inflation at 2.9% pressures ECB policy as U.S. data shows mixed signals.
U.S. job growth slows; pending home sales surge 4.8%, boosting market confidence.
Dollar Index slips to $104.179 amid uncertainty, impacting EUR/USD and GBP/USD.

EUR/USD, GBP/USD, DXY Price Forecast: DXY Holds $104; Expect a Rebound?

Market Overview

The Eurozone’s Core CPI Flash Estimate met expectations at 2.9%, while the CPI Flash Estimate slightly beat forecasts at 2.6%, suggesting persistent inflationary pressures that could influence the European Central Bank’s future policy. Meanwhile, U.S. economic data showed mixed signals.

The ADP Non-Farm Employment Change came in at a disappointing 122K, well below the expected 147K, indicating a slowdown in job creation. However, pending home sales surged by 4.8%, far exceeding the forecasted 1.4%, reflecting resilience in the housing market.

Despite this, the Dollar Index has slipped to $104.179, down 0.02%, reflecting investor uncertainty.

Events Ahead

Looking ahead, the market is closely watching the Bank of England’s (BOE) Monetary Policy Report and interest rate decision. The BOE is expected to raise rates from 5.00% to 5.25%, potentially boosting the GBP/USD, which currently sits at $1.28104. However, GBP could face volatility, especially if BOE Governor Bailey’s remarks or the MPC’s vote distribution indicate hesitancy in further rate hikes.

Across the Atlantic, U.S. unemployment claims and PMI data could further impact the Dollar Index and EUR/USD. A weaker-than-expected ISM Manufacturing PMI could reinforce the Federal Reserve’s dovish stance, maintaining downward pressure on the dollar and supporting the EUR/USD.

US Dollar Index (DXY)

Dollar Index Price Chart – Source: Tradingview

The Dollar Index is currently at $104.179, marking a slight decline of 0.02%. On the 4-hour chart, the pivot point is set at $103.953, which is crucial for determining market direction. Immediate resistance is seen at $104.378, with additional resistance levels at $104.733 and $104.997.

Support is located at $103.689, followed by $103.495 and $103.297. The 50-day Exponential Moving Average (EMA) is $104.353, below the 200-day EMA of $104.670, indicating a potential bullish trend.

The outlook remains bullish above $103.953, but a break below this level could trigger significant selling pressure.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair is currently priced at $1.08140, showing a slight increase of 0.02%. On the 4-hour chart, the pivot point is set at $1.08328, marking a critical level for traders. Immediate resistance is at $1.08706, with further resistance at $1.08961 and $1.09216.

Support levels are at $1.08014, $1.07797, and $1.07529. The 50-day Exponential Moving Average (EMA) is at $1.08416, slightly above the 200-day EMA at $1.08280, indicating a potential bearish trend.

The outlook remains bearish below the pivot point, but a break above $1.08328 could signal a shift to bullish sentiment.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

On the 4-hour chart, the GBP/USD pair is trading at $1.28104, a decrease of 0.05%. The pivot point is at $1.28541, serving as a key level for price action. Immediate resistance is located at $1.28881, followed by $1.29294 and $1.29718. Support levels are at $1.27792, $1.27549, and $1.27335.

The 50-day Exponential Moving Average (EMA) stands at $1.28684, slightly above the 200-day EMA at $1.28257, indicating a bearish trend. The outlook remains bearish below the pivot point, with a potential shift to bullish sentiment if prices break above $1.28541.

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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