US Dollar Price Forecast: ECB Holds Steady, PMI Data in Focus – Can DXY Extend Gains Against GBP/USD and EUR/USD?

US Dollar News: ECB Hold Shifts Focus to Fed and PMI Data

Markets were recalibrating after the European Central Bank kept its benchmark rates unchanged. It maintained the deposit rate at 2.25%, the main refinancing rate at 2.40%, and the marginal lending facility rate at 2.65%. “Decisions next time will be meeting by meeting and data dependent,” Christine Lagarde said. “As regards the inflationary effects of higher energy prices in view of the Middle East escalation, this adds to the uncertainty of the path of inflation over time.”

The dollar continued to be supported by strong fundamentals, and Treasury bonds were also higher. Attention turned to today’s S&P Global flash PMI surveys with US manufacturing seen at 54.5, services at 51.5, and the composite above the 50 threshold for expansion. A good set of numbers will provide more evidence of the US economy’s resilience ahead of the Federal Reserve meeting next week. Investors will also hope the Fed keeps rates on hold with officials signaling their cautious approach.

The euro was less focused on the outcome than on the ECB’s communication. Policymakers noted that inflation was easing in the euro area. But they said inflation might not return sustainably to the 2% target for some time due to fluctuating energy prices and noted that there is still room for more hikes.

Sterling focused on June retail sales and the flash PMI data for July this afternoon. The manufacturing PMI is projected at 52.0 and services PMI at 50.0. Stronger sales figures will provide more proof of the resilience of the domestic economy, supporting the Bank of England’s approach as the focus turns to fighting inflation.

Dollar Index (DXY) Technical Analysis: Uptrend Intact Above 101.20 Support

The USD Index remains positive after bouncing off the 100.50-100.60 support area and recapturing the 101.20 level. Current quotes around 101.33 sit above the 50-EMA (at 101.06) and the 100-EMA (at 100.97), which indicates buyers have been taking charge. The DXY’s rising trend line is continuing to act as support, and the current reading at RSI 60 suggests there is room for further upside, with no imminent signs of overbought conditions.

The first resistance is at 101.65, followed by 102.06 and then 102.42. On the lower side, the new support comes in at 101.20, with the 100.50 and 99.92 areas attracting buyers.

Provided DXY sustains above 101.20, the uptrend is on track and another leg higher towards 101.65-102.06 may be in the cards. The bullish perspective would fade if the DXY were to slide below 100.50 and open the way for further losses towards 99.92.

GBP/USD Technical Analysis: Bears Remain in Control Below Key Resistance

GBP/USD is under negative pressure after it was rejected out of the upside triangle channel and is currently unable to regain the former support area at 1.3393. The pair is around 1.3334, below the 50-EMA (at 1.3390) and the 100-EMA (at 1.3382). RSI is at 38, suggesting the downtrend is still intact and approaching oversold conditions.

First resistance is at 1.3347, then the former support region at 1.3393 and then 1.3449. Initial support is at 1.3274, and a slip further may put 1.3218 in the sights.

The bias remains lower for GBP/USD while quotes remain below 1.3393. Any rebounds in the 1.3393 region are likely to face seller offers and a break below 1.3274 can initiate another wave lower. If GBP/USD is able to stabilize above 1.3393 on a sustained basis, this could be the first indication of a resurgent uptrend.

EUR/USD Technical Analysis: Bearish Pressure Persists Below Triangle Resistance

EUR/USD is currently in a corrective phase after it was unable to consolidate gains above what used to be triangle support and now acts as resistance at 1.1408. The pair is changing hands near 1.1391 below the 50-EMA (at 1.1414) and the 100-EMA (at 1.1425), putting pressure on the short-term trend. RSI has ticked up to 43 from recent lows, which signals a slowdown in the bearish momentum although there’s nothing to indicate that buyers have reestablished themselves.

The first resistance is at 1.1408, then 1.1443 and then 1.1481. The immediate support is at 1.1364, and a slide further would put the 1.1325 region in play.

A sustained rebound above 1.1408 would give some respite to sellers, with further moves higher to face sellers’ offers. EUR/USD should remain in the hands of bears so long as quotes hover below 1.1408 and dips towards 1.1364 may see a slide further down to the 1.1325 region.