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EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – Investors Await Clarity from Powell

By:
James Hyerczyk
Published: Mar 5, 2024, 16:52 GMT+00:00

Key Points:

  • Dollar faces pivotal moment amid easing inflation pressure.
  • Powell to underscore Fed's data-dependent stance.
  • Employment figures awaited, caution dominates G10 FX market.
US Dollar Index (DXY)

In this article:

US Dollar Index

4-Hour U.S. Dollar Index (DXY)

The US Dollar is straddling a key technical pivot on Tuesday amid lower Treasury yields following ISM data showing easing inflationary pressures. The dollar index, up 2.4% for the year, stalled recently as investors await Fed policy clarity. Chair Powell is expected to underscore the Fed’s data-dependent stance during congressional testimony this week. Employment figures due Friday could impact markets.  Most currency pairs traded cautiously, contributing to subdued conditions in the G10 FX market. Market participants remain hesitant ahead of major events this week.

Technically, DXY is in a weak position after crossing to the bearish side of the 200-4 hour moving average at 103.735. This is new resistance. However, Tuesday’s price action suggests this level may act like a pivot over the near-term.

EUR/USD

4- Hour EUR/USD

The Euro is gaining ground against the dollar on Tuesday ahead of key events including ECB rate decision and Powell’s testimony. The EUR/USD is currently up 0.17%.

The ECB convenes Thursday, likely maintaining record 4% interest rates. Investors seek clues on potential rate cuts, scrutinizing economic forecasts. Recent survey data indicates Eurozone business activity rebounded last month, adding to optimism.

The EUR/USD is trending higher on Tuesday after trading through a number of previous tops and overtaking the 50-4H moving average at 1.0866. A sustained move over this level could drive the single-currency into the February 2 main top at 1.0898. Long-term support is the 200-4H moving average at 1.0828.

GBP/USD

4-Hour GBP/USD

Ahead of Wednesday’s British budget, the pound edged up by 0.24% to $1.2720. Finance Minister Jeremy Hunt has been working to temper speculation regarding significant pre-election tax cuts.

Technically, the 4-hour trend is up after the GBP/USD broke out above two days of resistance. Momentum traders are targeting the February 2 main top at 1.2772. On the downside, support is the 50-4H moving average at 1.2674.

USD/JPY

4-Hour USD/JPY

The Dollar/Yen is trading nearly flat on Tuesday after recovering from an early session setback that drove the Forex pair into its lowest level since February 29 at 149.205.

A further upward move could pave the path towards November’s peak at 151.92, yet it also raises concerns about potential Japanese intervention.

USD/CAD

4-Hour USD/CAD

The Bank of Canada is expected to advocate patience during its interest rate announcement this week, with economists predicting future rate cuts due to weakening economic conditions. Forecasts suggest the central bank will maintain its key interest rate at five percent on Wednesday, with potential cuts anticipated around June. Economic indicators prompt caution, as domestic spending declines and GDP growth remains subdued despite exceeding expectations in the fourth quarter.

Technically, the USD/CAD is edging lower after failing to overcome a resistance range at 1.3605 to 1.3606. Sellers may now be targeting 1.3541 for a potential breakdown. A move through this level will also put the major long-term support at 1.3479 on the radar. This is the 200-4H moving average.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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