EUR/USD, GBP/USD, DXY Price Forecast: European CPI Released; Eyes on US Events

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Published: Feb 29, 2024, 07:56 GMT+00:00

Key Points:

Eurozone struggles with economic underperformance; German Retail Sales and French Consumer Spending fall short of forecasts.
U.S. Core PCE Price Index and Unemployment Claims, alongside Eurozone and UK data, to dictate market dynamics.
US Dollar Index shows bearish signs below pivot; EUR/USD and GBP/USD exhibit cautious bullish trends with key resistance levels ahead.

Critical Economic Indicators Set to Influence EUR and GBP

Recent data revealed underperformance in the Eurozone’s economic activities, with German Retail Sales declining by 0.4% month-over-month against a forecasted 0.5% increase and French Consumer Spending dipping by 0.3%. However, French preliminary CPI outstripped expectations at 0.8%, compared to the 0.7% forecast, highlighting inflationary pressures.

Events Ahead

The focus now shifts to forthcoming U.S. data, with the Core PCE Price Index projected at 0.4% month-over-month, and Unemployment Claims expected to slightly decrease to 209K from the previous 201K. The Chicago PMI is also on the radar, anticipated at 48.1, potentially influencing market sentiment towards the USD.

For the Eurozone, Spanish Flash CPI year-over-year is expected at 2.8%, with German Unemployment Change forecasted to show a modest increase of 6K, shedding light on the labor market’s resilience.

In the UK, attention will be on the M4 Money Supply, expected to rise by 0.3% month-over-month, and Mortgage Approvals forecasted at 52K. Net Lending to Individuals is anticipated at 1.9B GBP, offering insights into consumer borrowing and spending habits.

US Dollar Index (DXY)

Dollar Index

The US Dollar Index has slightly receded by 0.05%, currently positioned at 103.852. With its current status below the pivot point of 104.128, the outlook appears bearish unless it can reclaim this threshold.

Resistance levels are mapped out at 104.440, 104.685, and 104.975, which the dollar needs to surpass to alter its trajectory. Conversely, support is pegged at 103.607, followed by 103.294 and 102.962, providing a cushion against further declines.

The 50-day Exponential Moving Average (EMA) stands at 103.967, closely flanked by the 200-day EMA at 103.794, suggesting a narrow band for potential movement but maintaining a bearish outlook below the pivot point.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair experienced a slight decline of 0.03%, currently trading at 1.08357. The pair finds itself just above its pivot point of 1.08222, hinting at a potentially bullish outlook should it stay above this marker. Resistance levels are identified at 1.08655, 1.08872, and 1.09101, suggesting room for upward movement.

Support, conversely, is established at 1.07963, with additional levels at 1.07615 and 1.07313 acting as potential fallbacks in case of a downturn.

The 50-day and 200-day Exponential Moving Averages, at 1.08196 and 1.08247 respectively, further support a cautiously bullish sentiment above the pivot, indicating stability and possible gains for EUR/USD moving forward.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

The GBP/USD pair slightly increased by 0.04%, trading at 1.26664. Positioned above its pivot point of 1.2650, the currency demonstrates a bullish tendency if it maintains above this level. Immediate resistance is encountered at 1.2700, with further ceilings at 1.2728 and 1.2759, indicating potential upward momentum.

Conversely, support lies at 1.2622, followed by 1.2582 and 1.2549, which could provide cushions against declines. The Relative Strength Index (RSI) and moving averages—50-day EMA at 1.2651 and 200-day EMA at 1.2644—underline a bullish sentiment above the pivot, suggesting a stable upward trend for the GBP/USD in the near term.

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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