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EUR/USD, GBP/USD, DXY Price Forecast: GBP Recovers as CPI Rises to 3.2%; DXY Steady

By:
Arslan Ali
Published: Apr 17, 2024, 08:32 GMT+00:00

Key Points:

  • UK CPI rises to 3.2%, indicating sustained inflation and potential BoE policy tightening.
  • ECB to maintain focus on stable inflation; Lagarde's speech may signal future ECB actions.
  • US Beige Book and FOMC speeches could influence Fed's rate decisions, impacting DXY.
US Dollar Index and FOMC

In this article:

Market Overview

Inflation data in the UK showed a persistent upward trend. The Consumer Price Index (CPI) year-over-year increased slightly to 3.2% from 3.1%, while the Core CPI rose to 4.2% from 4.1%, indicating sustained inflationary pressures.

Additionally, Producer Price Index (PPI) inputs slightly decreased by 0.1%, and PPI outputs remained steady at 0.2%. These figures underscore ongoing cost pressures within the UK economy, potentially influencing the Bank of England’s (BoE) monetary policy direction.

The Retail Price Index (RPI) also reflected higher inflation, registering at 4.3% year-over-year.

Events Ahead

In the Eurozone, focus will remain on inflation metrics with the Final Core CPI and Final CPI both holding steady year-over-year at 2.9% and 2.4%, respectively. These stable figures will be critical as ECB President Christine Lagarde addresses the market, providing insights into the European Central Bank’s future policy moves.

For the U.S., the release of the Beige Book will offer valuable insights into regional economic conditions, potentially impacting the Federal Reserve’s decisions. Upcoming speeches by FOMC members Mester and Bowman will also be significant, as they may provide further clarity on the Fed’s stance towards inflation and interest rates.

 

US Dollar Index (DXY)

Dollar Index
Dollar Index

The Dollar Index marginally decreased by 0.02%, trading at 106.251. Despite this slight downturn, the index remains just above its pivot point at 106.059, indicating a potentially bullish stance if it can maintain above this threshold. Immediate resistance levels are identified at 106.654, 107.365, and 107.934. Surpassing these could signal further strength in the dollar.

Conversely, if the index falls below its pivot, it could test support levels at 105.605, 105.050, and 104.456, where a break below could trigger a more pronounced sell-off. The 50-day and 200-day Exponential Moving Averages, at 105.48 and 104.50 respectively, suggest that the long-term trend remains upward. Traders should watch the 106.059 level closely; staying above it might prevent a deeper decline and stabilize the index’s position.

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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