US Dollar Price Forecast: DXY Holds 99.65 – Can GBP/USD and EUR/USD Break Out?

U.S. Dollar Holds Firm at 99.65 – Safe-Haven Flows Continue to Drive the Market

The dollar index is at a standstill around 99.50 to 99.70, still holding strong after that brief dip down to 96 earlier in the year. The greenback is finding support in two areas – safe-haven demand which is being driven by the ongoing mess in the Middle East and the Federal Reserve’s reluctance to budge on interest rates.

Rates are stuck at 3.50% to 3.75% and inflation isn’t exactly rocketing along – so the Fed has basically taken off the table any expectations for aggressive cuts this year. That keeps U.S. yields – relatively speaking – looking pretty high compared to the rest of the world. Which is sending capital sloshing over towards dollar-denominated assets because of course it is. Speculators have finally flipped to taking a long position on the dollar – a bit of a surprise after the heavy short selling we saw earlier in the year.

EUR/USD Stuck in Neutral Below 1.16 – And Its Mostly Because of the ECB

The eurozone is in a tough spot – energy prices are sending headline inflation up, but at the same time they are just crushing the life out of industrial demand – and that’s sending PMIs to ten-month lows.

The ECB just cant seem to make up its mind on what to do – hiking into weakness would be a bit suicidal, but cutting into inflation wouldnt be so great either. So markets are just pricing in two minor rate moves by year end at this stage. Which is all well and good for the Euro, but the Fed is still looking more decisive – so the Euro is just taking a back seat.

GBP/USD Rangebound – BoE Signals Its Ready to Get a Bit More Aggressive

Cable is trading tight at 1.3350 to 1.3400, with UK CPI stuck at 3.0% and core inflation ticking up to 3.2%. The Bank of England kept rates steady at 3.75% but managed to flag up some rising risks from energy price passes through, which is enough to get two-year gilt yields moving upwards by about 60 basis points in March alone.

Dollar Index Grinding Sideways at 99.65 – The 99.40 Demand Zone Holds the Line

The U.S. Dollar Index (DXY) is currently stuck at 99.650 on its 4 hour chart with basically no movement to speak of today – its been flat as a pancake. For the past 2 weeks, the price has been bouncing around inside a tiny trading range between 99.415 support and 100.145 resistance. There’s a particular blue highlighted zone just below the 99.75 level.

There’s an ascending trendline from back in late February near the 97.80 level that’s still intact, with the blue 200-period MA sitting at about 98.80, and that’s rising as well to reinforce that lower trend. On top of that, the shorter red MA near 99.60 is flatlining right where price is now, indicating that we’re stuck in limbo.

Above us, we have 100.14 and 100.53 marked as key resistance points – the sellers have already capped two rallies there this month.

Trade Idea: Long the DXY at the close of the next 4 hour candle above 100.15, aiming for 100.55, with a stop-loss just below 99.40.

GBP/USD Squeezed Inside a Triangle at 1.3366 – Breakout Is Brewing

GBP/USD is currently stuck at 1.33669 on the 4 hour chart, caught up in a symmetrical triangle that started tightening up late back in February. The trendline from the 1.3575 highs coming down and the trendline from the first serious low of the year around 1.3200 moving up – and the pair is running out of room in all that.

This kind of squeeze usually leads to a big move once one of these lines gives up the ghost. The 200 period ma (blue) on 1.3380 is right on the current price line and the pair keeps tip-toeing above and below it, showing us neither the bulls or bears have got the upper hand.

The red short term ma near 1.3345 is flat as a pancake and acting almost like a gentle floor underneath. The 1.3433 level has already stopped rallies dead in their tracks multiple times over both February and March – so it’s probably worth having a close eye on this one if a break out occurs upwards. Below that we have 1.3292 as the nearest support zone and then the deeper floor of 1.3217 to go.

Trade idea: If GBP/USD can break above the 1.3435 resistance then its probably worth buying and maybe targeting 1.3500, or on the other hand if it goes down below 1.3290 then look to sell and probably targeting 1.3217.

EUR/USD Battling the 200 MA From Below –  1.1624 Resistance Decides the Next Move

EUR/USD is trading at 1.15638 on the 4 hour chart, barely budged from where it started the day. The pair has been making a slow recovery since hitting that low of 1.1400 back in mid-March – if you look at the chart, you’ll see a nice clear trendline forming as it hits higher lows at 1.1400 then 1.1486 then 1.1500. That trendline is still intact.

The 200 period moving average (that blue line) is sitting just under 1.1650 – and its slope is pointing down. Price hasn’t been able to get above it lately – and that tells you the bears are still calling the shots long-term. The red moving average near 1.1553 is finally starting to flatten out and price is right on top of it – so its a bit of a tipping point. 1.1624 is a key horizontal level to keep an eye on above, with 1.1677 and 1.1746 coming up further. Below that, the first level of support is 1.1486, and then theres a stronger level down at 1.1444.

Trade idea: If you see a close on the 4 hour chart above 1.1625, you might want to go long targeting 1.1745 – but be ready to get out if it falls below 1.1530.