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EUR/USD, GBP/USD, DXY Price Forecast: DXY Skyrockets to 106.40; Buy Now?

By:
Arslan Ali
Updated: Apr 16, 2024, 10:01 GMT+00:00

Key Points:

  • U.S. Core Retail Sales surge to 1.1%, hinting at robust consumer spending.
  • European Trade Balance forecasted at €27.3 billion, reflecting economic activity.
  • Upcoming speeches by Fed Chair Powell could influence U.S. monetary policy.
US Dollar Index and FOMC

In this article:

Market Overview

U.S. Core Retail Sales recently outpaced expectations, posting a rise of 1.1% against a forecast of 0.5%. This uptick, alongside a 0.7% increase in overall Retail Sales, suggests strong consumer activity, which may discourage the Federal Reserve from early interest rate cuts.

In Europe, the German Wholesale Price Index (WPI) saw a modest rise to 0.2%, hinting at mild inflationary pressures.

Events Ahead

Upcoming economic reports include the Italian Trade Balance, expected to show a balance of €3.44 billion, and the European Trade Balance projected at €27.3 billion. Additionally, the German ZEW Economic Sentiment is anticipated to improve to 35.9, providing insights into economic sentiment.

In the UK, labor market data released today showed a Claimant Count Change of 10.9K, with the Average Earnings Index holding steady at 5.6% and the Unemployment Rate at 4.2%. The Bank of England Governor’s upcoming speech is eagerly awaited for further indications of monetary policy directions.

For both currency pairs, the following U.S. data will be pivotal:

  • USD Building Permits and Housing Starts: Forecasted at 1.51M and 1.48M respectively, these figures will provide a snapshot of the U.S. housing market’s health.
  • USD Industrial Production: Expected to increase by 0.4%, with Capacity Utilization Rate projected at 78.5%.
  • Fed Chair Powell’s Speech: His insights will be vital for understanding the Fed’s view on economic conditions and interest rate decisions.

US Dollar Index (DXY)

Dollar Index
Dollar Index

The Dollar Index today demonstrated modest gains, climbing 0.14% to a level of 106.409. It is currently trading above its pivotal mark at $105.823, which suggests a potential continuation of the upward momentum. Immediate resistance is anticipated at $106.654, with further ceilings at $107.365 and $108.087.

On the flip side, should the index retreat, it might encounter substantial support at $105.136, with additional lower barriers at $103.967 and $103.184. The 50-day and 200-day Exponential Moving Averages, positioned at $105.230 and $104.367 respectively, underpin the bullish sentiment.

Holding above $105.823 could sustain the uptrend, while a descent below this level might signal a shift towards a selling trend.

EUR/USD Technical Forecast

EUR/USD Price Chart - Source: Tradingview
EUR/USD Price Chart – Source: Tradingview

About the Author

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.

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