US Dollar Price Forecast: DXY Holds $101.33 as Markets Await NFP — Can GBP/USD and EUR/USD Recover?

Currencies Await NFP Data as Policy Divergence Persists

Currency markets as of July 2 saw a USD, EUR, and GBP mix ahead of today’s closely watched nonfarm payrolls. Today’s nonfarm payrolls numbers should provide more clues about labor market conditions and wage growth that could impact the Fed’s outlook since inflation is proving stickier on its core measures. A better than expected report may help keep the US dollar momentum on the upside since it adds fuel to a hawkish stance for easing, while a weaker number may do the contrary.

Elsewhere, the Euro is still stuck in the middle with weak growth prospects from the Euro zone economy, but the ECB has been determined to hold the line on inflation targets. Uneven economic positions across countries in the bloc and uneven price increases could lead the pair to trade off of various news data and policy shifts.

The UK Pound may also get stuck with concerns about UK services sector inflation, with the economy also showing some weakening. Fiscal developments and the labour market will be two other factors affecting the GBP.

At a higher level, currency strength or weakness in the major trio could also be underlined by divergent fundamentals in each economy, including inflation, growth, and fiscal position. All three currencies overall may see their shares of risks move in all directions. Other drivers to consider include their trade positions and net capital flows while looking to the sustainability of their monetary authorities, able to maintain their policy stances while supporting their country’s growth. Today’s nonfarm payrolls numbers will add to the story on how all three will play out for all three currency pairs this week.

DXY Holds $101.33 – Green Triangle Breakout Test on 1D

DXY is sitting at $101.33 on the daily timeframe. After breaking above the $97.67 swing low, buyers took a test of the breakout level near $100.36 with green candles continuing higher as on 1D. Buyers hold control on price action while taking higher highs and higher lows in support of the white uptrend line on the chart. RSI is above 55, indicating bullish momentum.

Volume profile indicates $100.36 will act as a pivot that will provide support for further advances. The next level of focus is a Fibonacci extension target of $103.09 in the coming weeks. 1D remains firmly bullish above $100.36 in a clear uptrend channel. Higher highs and higher lows continue to keep buyers in control.

Trade Idea: Long at $101.33 for $103.09, with a stop at $100.36

GBP/USD Holds $1.3289 – Solid Resistance Zone Test on 4h

GBP/USD is at $1.3289 on the 4-hour timeframe. Bearish candles fell back at the resistance area near $1.3317. The price was rejected by a moving average near $1.337. Selling pressure is absorbing buying volume near the resistance area. RSI is near 58, which indicates neutral-to-bullish momentum.

Volume profile indicates a pivot cluster of $1.320 to $1.331 that will serve as a resistance area. The next level of focus is the support cluster at $1.314 to $1.320. 4H remains neutral-to-bearish under the resistance area within the broad trading range. Lower highs continue to keep sellers on hold as market rallies.

Trade Idea: Short at $1.3289 for $1.314, with a stop at $1.332

EUR/USD Holds $1.1388 – EMA 50 Defense on 4h

EUR/USD is at $1.1388 on the 4-hour timeframe. Bullish candles bounced on the 50-period EMA near $1.1412 after price was rejected by a moving average near $1.162. Buyers continue to maintain control on price action by absorbing the sell volume near the support area and holding the lower lows higher than prior lows. RSI is near 50, which indicates neutral momentum.

Volume profile indicates a pivot cluster of $1.138 to $1.145, which may provide support for further gains. The next level of interest is a resistance cluster at $1.150 to $1.162. 4H remains neutral-to-bullish above the 50-period EMA within the broader downtrend. Lower highs continue to remain in place as the market dips.

Trade Idea: Long at $1.1388 for $1.150, with a stop at $1.132