EUR/USD, GBP/USD, DXY Price Forecast: Fed’s 5.50% Rate to Shape Markets

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Published: May 1, 2024, 07:57 GMT+00:00

Key Points:

GBP faces downturn with a 0.4% drop in Nationwide HPI, reflecting UK housing market struggles.
Anticipated drop in ADP Employment may soften USD, influencing EUR/USD exchange dynamics.
Fed's rate decision remains at 5.50%, pivotal for future monetary policy and currency valuations.

EUR/USD, GBP/USD, DXY Price Forecast: Fed’s 5.50% Rate to Shape Markets

Market Overview

In recent activity, the GBP experienced a slight downturn with the Nationwide HPI showing a decrease of 0.4% month-on-month, contrasting with modest expectations. This data point underscores the ongoing challenges in the UK housing market, which can impact broader economic sentiment and thus, currency value.

Events Ahead

The ADP Non-Farm Employment Change is anticipated to reflect a slight decline in job additions, dropping from 184K to 179K, potentially softening the dollar and influencing EUR/USD dynamics. The ISM Manufacturing PMI is also on the radar, expected to edge up slightly, indicating a mild expansion in manufacturing activity. The update on JOLTS Job Openings, another key metric, will provide further insights into the labor market’s health.

For GBP/USD, attention turns back to the UK with the Final Manufacturing PMI poised to reaffirm a contraction in the manufacturing sector, maintaining a reading of 48.7. The outcome of the UK’s 10-year Bond Auction will also be watched closely as it provides clues about investor confidence and economic outlook, which are critical for GBP valuation.

The day concludes with significant U.S. events including the Federal Reserve’s decision on interest rates, expected to remain at 5.50%, and the Fed’s comprehensive press conference which could herald shifts in monetary policy outlook.

US Dollar Index (DXY)

Dollar Index

The Dollar Index today registers a modest rise, trading at 106.402, marking an increase of 0.12%. Currently, it floats slightly above its pivot point set at 106.207, suggesting mild bullish undercurrents in the near term. The index encounters its first significant resistance at 106.536, with further hurdles at 106.871 and 107.266. These levels will test the dollar’s strength in upcoming sessions.

Support for the index begins at 105.927, extending to 105.537 and 105.214, which could play a crucial role in cushioning any downward movements. The 50-Day and 200-Day Exponential Moving Averages, at 105.90 and 105.16 respectively, underscore a generally bullish trend but highlight possible volatility. The Dollar Index exhibits a bullish stance above its pivot, but surpassing 106.536 is crucial for sustaining upward momentum.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair is currently trading at 1.06599, showing a decline of 0.10%. The currency pair is positioned below today’s pivot point of 1.0683, suggesting a bearish bias in short-term market sentiment. It faces immediate resistance at 1.0735, with additional barriers at 1.0766 and 1.0793 that could limit upward movements.

Conversely, support levels are established at 1.0631, 1.0603, and 1.0575, which could stabilize further declines.

The 50-Day and 200-Day Exponential Moving Averages, at 1.0694 and 1.0746 respectively, indicate that the pair is navigating through a critical range. A move above the pivot of 1.0683 might tilt the balance towards a bullish outlook. The EUR/USD pair shows a downward trend below 1.0683, with potential shifts to bullish sentiment on breaching this threshold.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

Today, the GBP/USD pair is trading at 1.24851, marking a decrease of 0.15%. It remains below the critical pivot point of 1.25198, indicating a bearish sentiment in the near term. The pair encounters immediate resistance at 1.25786, with subsequent thresholds at 1.26401 and 1.27087 that need to be surpassed to signal a stronger upward trend.

Conversely, support is established at 1.24669, with further safety nets at 1.24163 and 1.23656. Breaking below these levels could lead to a sharper decline. The 50-Day and 200-Day Exponential Moving Averages, at 1.24894 and 1.25486 respectively, suggest the pair is hovering near a key transitional zone.

The GBP/USD pair exhibits a bearish stance below its pivot point, with potential for a bullish shift if it sustains above 1.24669.

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.