EUR/USD, GBP/USD, DXY Price Forecast: DXY Supported at $105.500; Reversal Coming?

By:

Arslan Ali

Published: May 2, 2024, 07:14 GMT+00:00

Key Points:

ADP Non-Farm Employment Change suggests a slowing private sector with only 192K jobs added.
Final Manufacturing PMI remains stagnant at 50.0, indicating no growth in the sector.
JOLTS Job Openings decrease to 8.49M, highlighting a cooling trend in the labor market.

EUR/USD, GBP/USD, DXY Price Forecast: DXY Supported at $105.500; Reversal Coming?

Market Overview

The trading day brought several key U.S. economic indicators that have implications for the currency markets:

ADP Non-Farm Employment Change: Reported at 192K, below expectations of 179K but significantly lower than the previous 208K, suggesting a slowdown in private sector employment growth.
Manufacturing PMIs: The Final Manufacturing PMI held steady at 50.0, indicating no expansion or contraction. The ISM Manufacturing PMI, however, showed a slight contraction at 49.2, below the neutral 50.0 mark.
JOLTS Job Openings: Decreased to 8.49M from a previous 8.81M, hinting at a cooling labor market.
Federal Funds Rate: Remained unchanged at 5.50%, aligning with expectations.

In the UK, the Nationwide HPI showed a monthly decline of -0.4%, suggesting a cooling in the housing market, while the Final Manufacturing PMI stood at 49.1, indicating industry contraction.

Events Ahead

The focus now shifts to upcoming U.S. data releases which could drive significant market movements:

Challenger Job Cuts y/y: Set at 0.7%, providing insights into employer layoff intentions.
Unemployment Claims: Expected at 212K, closely watched for labor market health indications.
Prelim Nonfarm Productivity and Unit Labor Costs: Essential for understanding labor efficiency and cost pressures, with productivity expected at 0.8% and labor costs at 3.6%.
Trade Balance: Forecasted at -$69.5B, this figure will give further insight into the economic dynamics between imports and exports.

In Europe, manufacturing PMIs from Spain, Italy, France, and Germany will be closely monitored, with German PMI notably low at 42.2, signalling ongoing industrial challenges.

US Dollar Index (DXY)

Dollar Index

Today’s Dollar Index analysis for May 2, 2024, indicates a minor increase to 105.620, up by 0.09%. It’s trading above its pivot point at 105.527, suggesting a possible bullish trend.

Resistance levels are at 105.927, 106.188, and 106.540, while support is at 105.214, with further levels at 104.896 and 104.448.

The 50-day EMA at 105.874 and the 200-day EMA at 105.188 suggest a potential bullish bias if the index remains above 105.527, though a fall below this level could signal a trend reversal.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

Today’s technical outlook for the EUR/USD pair, shows a slight increase to 1.07176, up 0.02%. The pair is trading just above the pivot point of 1.06968, suggesting a marginally bullish stance.

Resistance levels are set at 1.07431, 1.07733, and 1.08082, which, if surpassed, could enhance bullish sentiment. Conversely, immediate support is found at 1.06532, with further support at 1.06311 and 1.06029. A decline below these levels might accelerate selling pressure.

The 50-day EMA at 1.06961 is near the pivot point, hinting at a crucial moment, while the 200-day EMA at 1.07437 is near the first resistance level, indicating potential significant price movements. Staying above 1.06968 may support a bullish trend, but falling below could suggest a bearish shift.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

The GBP/USD pair is slightly up, trading at 1.25351, a 0.05% increase from the previous day. It sits above the pivot point of 1.25092, indicating a potential upward trend. Resistance levels are established at 1.25703, 1.26401, and 1.27087. Overcoming these could signal continued bullish momentum for the pair. On the downside, support levels are found at 1.24669, 1.24067, and 1.23337, with breaches possibly leading to a stronger downward movement.

The 50-day Exponential Moving Average (EMA) at 1.24956 is just below the pivot point, suggesting near-term support, while the 200-day EMA at 1.25468, slightly above the current price, acts as a resistance marker. This positioning of EMAs around key price levels points to a delicate balance in the market. The outlook remains cautiously optimistic above the pivot point of 1.25092, but falling below this could trigger a sharp sell-off, aligning with broader market sentiments.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.