EUR/USD, GBP/USD, DXY Price Forecast: Will an Overbought DXY See a Correction?

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Published: Mar 25, 2024, 07:48 UTC

Key Points:

German Import Prices halting decline at 0.0% hints at potential easing of inflationary pressures.
Retail Sales in the UK holding steady at 0.0% showcases consumer resilience amid economic challenges.
The German Ifo Business Climate Index's rise to 87.8 signals growing optimism in Europe's largest economy.

Market Overview

On Friday, the German Import Prices recorded a surprising halt in decline, registering at 0.0%, notably better than the anticipated -0.4% and a significant improvement from the previous -1.0%. Whereas, the Retail Sales in the UK also defied expectations, remaining flat at 0.0% against a forecasted -0.4% decline, indicating a resilient consumer sector amidst economic headwinds.

The German Ifo Business Climate Index surpassed forecasts, coming in at 87.8 against an expectation of 85.9, marking an uptick from the previous 85.5. Lastly, the CBI Industrial Order Expectations in the UK matched previous figures at -18, better than the anticipated -20.

Events Ahead

Key among these are comments from FOMC Member Bostic and the anticipated New Home Sales data, expected to show an increase to 675K from 661K. Additionally, the week is packed with significant reports, including the U.S. Final GDP quarter-over-quarter, pegged at 3.2%, and the Revised University of Michigan Consumer Sentiment at 76.5, alongside Pending Home Sales, projected at 1.5% from a previous -4.9%.

The GBP/USD braces for impacts from domestic fronts with the CBI Realized Sales and remarks from MPC Member Mann at the Royal Economic Society Conference in Belfast, offering fresh insights into the UK’s economic outlook.

US Dollar Index (DXY)

Dollar Index

The Dollar Index experienced a slight decline, dipping by 0.07% to 104.359, hinting at momentary bearish pressure within a largely bullish long-term trend. Today’s key pivot point stands at 104.492, marking the threshold between potential upward momentum and continued bearish trend.

With immediate resistance levels poised at 104.736, 104.978, and peaking at 105.277, the path for a bullish resurgence is clear, should the index cross above the pivot. Conversely, support levels at 104.184, 103.985, and 103.678 offer a safeguard against further declines.

The proximity of both the 50 and 200-Day EMAs below the current price strengthens the long-term bullish outlook, albeit with a cautious note for potential shifts above or below the pivotal 104.492 mark.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair saw a modest increase of 0.07%, trading at 1.08153. Positioned just below a critical pivot point at 1.0833, the pair’s current trajectory suggests a cautious market sentiment. Should it surpass this level, the pair faces resistance at 1.0869, with further barriers at 1.0903 and 1.0943 potentially limiting upward movement.

On the downside, immediate support is identified at 1.0788, followed by 1.0766 and 1.0744, offering a safety net against potential declines. The near convergence of the 50 and 200-Day EMAs around 1.0867 and 1.0861 respectively, indicates a tightly contested market, with the pair’s direction likely hinging on its ability to breach the pivotal 1.0833 mark.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

The GBP/USD pair experienced a slight uptick of 0.07%, reaching 1.26104, as it navigates through a cautiously optimistic market environment. Currently situated above the pivotal point of 1.2574, it confronts immediate resistance at 1.2628. Surpassing this could see challenges at 1.2661 and further at 1.2716, delineating potential upward momentum.

On the downside, support is firmly placed at 1.2536, with subsequent levels at 1.2501 and 1.2465 poised to cushion any downward movements. The convergence of the 50 and 200-Day EMAs around 1.2701 and 1.2697 respectively reinforces a bullish sentiment, conditional on maintaining above the critical threshold of 1.2574.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Arslan Aliauthor

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.