US Dollar Price Forecast: DXY Flat Ahead of PPI – Will FOMC Hold GBP/USD and EUR/USD Steady?

Market Overview

The US dollar is at a crossroads right now – navigating some seriously choppy waters which has the dollar index (DXY) stuck around 99.54. It’s been a rough ride for this currency, and a lot of that has to do with a very cautious wait-and-see approach from investors who are waiting with bated breath for Wednesday’s Federal Reserve interest rate decision.

With just about everyone predicting the FOMC will leave interest rates right where they are – between 3.50% and 3.75% – the market’s started to shift its focus to the future, and traders are now trying to factor in a fairly modest 25-basis-point cut later in the year.

Still, the dollar hasn’t completely fallen off a cliff yet because, in a way, its value is being propped up as a global safe haven. Tensions in the Middle East are heating up fast – we’ve just seen Iran’s security chief Ali Larijani get assassinated, and the army chief Amir Hatami is threatening “decisive” action – and that’s sent demand for the dollar skyrocketing. And these rising oil prices, along with fears about the inflation outlook, have got investors more on edge than a tightrope walker on a windy day.

The real decision-maker for the dollar from here on out is going to be Fed Chair Jerome Powell. As he prepares to give one of his last press conferences before he leaves office in May, any signal he sends about inflation could send this currency either soaring or plummeting – it’s a pretty big deal.

US Dollar Index Forecast: DXY Holds 99.52 Support as Fibonacci Confluence Tests Bullish Structure

The US Dollar Index is trading at 99.57 on the 4 hour chart & looks to have stabilised just above the 0.5 Fibonacci retracement line at 99.52 after pulling back from 100.54 – its recent swing high.

Price is stuck compressing against an ascending trendline and the 50 period moving average is hovering around 99.52, which is providing some much-needed support to the bulls and reinforcing a generally bullish pattern.

Now, the 0.382 Fibonacci level at 99.76 is acting as a bit of an immediate ceiling, and it looks like 100.06 is still the main breakout level to watch.

The RSI has dropped down into the mid-40s, which is telling us that the momentum is easing off, but not to the point of oversold just yet. If we can keep the price above 99.52 for a bit, we’d likely see a retest of 100.06, but if that fails, I think we’re looking at 99.28 & 98.93 as potential targets.

GBP/USD Forecast: Pound Tests 1.3375 Resistance as Descending Trendline Limits Upside

GBP/USD is hovering at 1.3360 on the 4-hour chart, and it noses up against a stubborn trendline that has been the bane of bulls since the late-Feb peak. The price has bounced back from that 1.3223 low and has been churning out higher intraday lows, but it’s still struggling to get above the 50-period moving average at 1.3412 and the 200-period MA at 1.3483. As a result, the overall trend is still bearish.

Now the 1.3375 zone is looking increasingly like a major resistance level, and it’s where all the recent selling has been coming from. The RSI has started to climb back towards the middle of the dial, a sign that momentum is picking up, but it’s not yet getting into overdrive. If the price can break through the 1.3412 barrier, 1.3483 is the next target. But if it gets rejected – well, that could be trouble, and we could see the price pull back all the way to 1.3286 and 1.3223.

EUR/USD Forecast: Euro Rebounds Toward 1.1569 as Bearish Channel Meets Fibonacci Resistance

EUR/USD is hovering just above 1.1542 on the 4 hour chart , after bouncing back up from that 1.1413 low and now heading straight for a key support/resistance area at 1.1569. The price is still stuck inside a wider selling trend, where the 50 period moving average is keeping it in check up above it at the moment and the 200 period MA is still pointing downwards at 1.1736, which is a pretty clear bearish signal in the longer term.

The rebound has pushed the price above the 0.382 Fibonacci retracement level at 1.1510, at least, and 1.1569 is now the next real test – basically, it’s the top of an old area where sellers were before. The RSI is just about to push on into the 50s, which is telling us that momentum is starting to pick up, a break above 1.1569 lets price go for 1.1667 while a failure at the moment could see price back to 1.1473, then 1.1413.