US Dollar Forecast: DXY Slips 0.80%, Eyes on NFP Impact on EUR/USD and GBP/USD

Highlights

• Dollar Index’s recent 0.80% drop from Thursday’s high highlights vulnerability ahead of crucial NFP data, indicating a pivotal moment for USD’s short-term direction.
• Upcoming Average Hourly Earnings and Non-Farm Employment Change data set to shape Fed policy expectations, influencing USD’s trajectory amidst global uncertainties.
• Technical indicators suggest the Dollar Index at a critical juncture; a move above 102.974 could hint at a bullish correction, while below signals continuation of the downtrend.

Dollar Index Dips as NFP Looms: A Critical Juncture for USD

The US Dollar has experienced a significant retreat, with the Dollar Index sliding approximately 0.80% from the previous day, pushing it below the 103 mark. The US Unemployment Claims edged up to 224K, surpassing expectations and previous figures, while the ISM Manufacturing PMI showed a slight improvement to 49.1, still indicating contraction. The ISM Manufacturing Prices also rose to 52.9, suggesting increasing costs in the sector.

Events Ahead

Looking ahead, forecasts indicate Average Hourly Earnings may see a slight deceleration to 0.3% month-over-month, while Non-Farm Employment Change is expected to dip to 187K from 216K.

Additionally, the Unemployment Rate is anticipated to increase marginally to 3.8%. The Revised University of Michigan Consumer Sentiment Index is also on the horizon, with expectations set at 78.9, slightly above the previous figure.

This upcoming data presents a pivotal moment for the US Dollar, offering potential insights into wage inflation, job market health, and consumer sentiment—factors critical to understanding the Federal Reserve’s next moves and the broader economic outlook.

US Dollar Index (DXY)

The Dollar Index is hovering around a pivot point of 102.974, faces immediate resistance levels at 103.310, 103.748, and 104.037, while support is found at 102.658, 102.342, and 102.081.

The 50-day Exponential Moving Average (EMA) at 103.347 and the 200-day EMA at 103.089 hint at a prevailing downtrend, yet the formation of a doji candle near the pivot suggests potential exhaustion of bearish momentum.

This technical setup indicates a critical juncture; a movement above 102.974 could signal a bullish correction, whereas a dip below this level may reinforce the downtrend.

The Dollar Index’s direction is contingent on its stance relative to 102.974, with a bullish outlook above this threshold and a bearish perspective if it falls below.

EUR/USD Technical Forecast

The EUR/USD pair has shown a slight increase of 0.10%, currently trading at 1.08863. Within the 4-hour chart framework, the pair navigates above the pivot point at 1.08748, indicating a slight bullish momentum. Resistance levels are set at 1.09015, 1.09317, and 1.09648, suggesting potential ceilings for upward movements. Conversely, support is found at 1.08481, followed by 1.08181 and 1.07810, marking critical junctures for the pair’s stability.

Technical indicators reveal a 50-day Exponential Moving Average (EMA) at 1.08544 and a 200-day EMA at 1.08872, closely aligning with the current price, showcasing a balanced market sentiment. A significant chart pattern has emerged as EUR/USD broke its downward trend line at the 1.0874 level, supported by a bullish candle formation, hinting at the possibility of continued upward trajectory.

The current technical stance for EUR/USD is bullish, conditional on maintaining above the 1.08748 mark, hinting at further gains if this level holds as support.

GBP/USD Technical Forecast

The GBP/USD pair slightly ascended today, registering a 0.07% increase to 1.27513. On the 4-hour chart, the pivot point is marked at 1.27542, delineating the immediate trajectory for the currency pair. Resistance levels are identified at 1.27833, 1.28139, and 1.28412, hinting at potential upward barriers. Meanwhile, support is established at 1.27042, with further cushions at 1.26666 and 1.26244, underscoring key levels for any downward adjustments.

Technical analysis reveals a 50-day Exponential Moving Average (EMA) at 1.27049 and a 200-day EMA at 1.26766, indicating a slight bullish undertone. However, the presence of a doji candlestick pattern below the critical level of 1.2754, coupled with a descending trend line on the four-hourly chart, suggests that bullish momentum might be waning.

This scenario points to a potential bearish correction below this level. Conversely, a breach above this level could pave the way for further gains. The GBP/USD stands at a crossroads, with a bearish outlook below the pivot point of 1.27542.

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