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US Dollar Forecast: DXY at 104.019, Focus on EUR/USD, GBP/USD, PMI Ahead
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DXY reaches 104.080 after US reports 353K job additions, setting the stage for EUR/USD and GBP/USD reactions to upcoming PMI data releases.
Highlights
- Dollar Index climbs to 104.080, hinting at strength after US reports 353K job additions.
- Upcoming PMIs and PPI data critical for EUR/USD; GBP/USD hinges on UK Services PMI.
- Technicals suggest DXY bullish above pivot; EUR/USD, GBP/USD watch for key support levels.
Dollar Index Rises Amid Strong US Job Data
During the Asian session, the Dollar Index experienced a slight increase today, moving up by 0.05% to 104.019 amid the US labor market figures that showed strength with the Non-Farm Employment Change reporting a robust addition of 353K jobs. The Unemployment Rate remained steady at 3.7%, underscoring a tight labor market.
Furthermore, the Average Hourly Earnings month-over-month saw a higher-than-anticipated rise to 0.6%, indicating wage growth and potential inflationary pressures.
Events Ahead
Looking ahead, the Final Services PMI and ISM Services PMI for the USD are anticipated to remain steady or show improvement, with forecasts at 52.9 and 52.0, respectively.
For the Eurozone, the focus shifts to the Services PMI readings across major economies, including Spain, Italy, France, and Germany, alongside the Sentix Investor Confidence and Producer Price Index (PPI) data. These figures are critical for assessing the service sector’s health and overall investor sentiment within the Eurozone, potentially influencing the EUR/USD pair.
The GBP/USD forecast also hinges on the Final Services PMI for the UK, expected to maintain at 53.8, suggesting steady service sector activity.
US Dollar Index (DXY)
The Dollar Index (DXY) shows a slight rise to 104.080, hinting at upcoming pivotal movements with its position just under the pivot point at 104.193. Resistance is identified at 104.385, 104.599, and 104.853, challenging any further gains. Support, meanwhile, is established at 103.892 and extends down to 103.408 through key Fibonacci levels.
The 50-day and 200-day EMAs, positioned below the current index value, suggest a generally bullish outlook. Yet, signs of overbought conditions and the presence of a shooting star candlestick below the pivot point alert to the possibility of a near-term correction, advising vigilance for a potential shift in trend.
EUR/USD Technical Forecast
The EUR/USD pair is trading at $1.07753, marking a modest decline of 0.11% with pivot point at $1.07710, indicating a delicate balance between buyers and sellers. Immediate resistance is located at $1.08072, with further ceilings at $1.08390 and $1.08685. Should the pair ascend, these levels could serve as benchmarks for potential resistance. On the downside, immediate support is found at $1.07429, followed by $1.07244 and $1.06934, outlining critical junctures that could halt declines.
The 50-day Exponential Moving Average (EMA) stands at $1.08397, with the 200-day EMA at $1.08813, both above the current price, suggesting a near-term bearish bias. However, a downward trendline is expected to bolster the EUR/USD around the $1.07710 level. A breach below this could catalyze a selling trend towards the outlined support levels.
GBP/USD Technical Forecast
The GBP/USD pair is experiencing a slight decline, currently positioned at $1.26119, down by 0.14%. The 4-hour chart reveals the pair’s activity hovering above the pivot point of $1.25977, indicating a pivotal moment for potential direction.
Resistance is encountered first at $1.26657, with additional barriers at $1.27111 and $1.27564 that may cap upward moves. On the downside, immediate support is seen at $1.25672, followed by $1.25310 and $1.25013, marking crucial levels for maintaining bullish sentiment.
The 50-day and 200-day Exponential Moving Averages, at $1.26880 and $1.26737 respectively, suggest a narrow window for the pair’s short-term trend. The formation of a double bottom pattern at the pivot point, complemented by a Doji candle, hints at a possible inflection point favoring buyers.
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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