EUR/USD and GBP/USD Price Forecast: Dollar Index Steady Near 103.125, Is it Calm Before the Storm?

Highlights

• US Core PCE Index stable at 0.2%, Pending Home Sales surge to 8.3%, Dollar Index dips slightly.
• Eurozone faces mixed signals: German consumer climate worsens, Spanish unemployment stable at 11.8%.
• Upcoming events: US employment data and BOE policy report set to influence market trends this week.

Global Markets Brace for Upcoming Economic Data

With Monday presenting a light schedule in terms of economic events, the Dollar Index remains steady ahead of key events including the Fed’s monetary policy, the FOMC, and the US Non-Farm Payrolls (NFP). This stability can be seen as the calm before a potentially volatile storm ahead in the currency markets.

The past week saw pivotal economic data releases shaping market sentiment. In the US, the Core PCE Price Index remained stable at 0.2%, aligning with projections, while Pending Home Sales surged to 8.3%, far exceeding expectations. The Federal Funds Rate was maintained at 5.50%, as confirmed by the latest FOMC statement and press conference.

In Europe, economic indicators painted a mixed picture. Germany’s GfK Consumer Climate deteriorated more than expected, reflecting ongoing economic challenges. The Spanish Unemployment Rate held steady at 11.8%, while the Eurozone saw modest changes in M3 Money Supply and Private Loans. Notably, the Bundesbank reported a weaker than anticipated German economy, signaling potential delays in recovery.

Events Ahead

Looking ahead, the market focus shifts to the USD Loan Officer Survey, though it’s not deemed significant. Key attention is on the US economic data releases on Friday, including Average Hourly Earnings, Non-Farm Employment Change, and Unemployment Rate.

Simultaneously, the GBP market will react to the Bank of England’s Monetary Policy Report and Rate Votes on Thursday, setting the stage for potential shifts in GBP/USD trends. These events collectively prepare traders for a week of strategic decision-making, influenced by these critical economic indicators.

US Dollar Index (DXY)

As of January 29, the Dollar Index slightly declines to 103.124, a 0.01% drop. Key resistance levels are at 103.748, 104.037, and 104.280, while support lies at 103.020, 102.760, and 102.385. The 50-day and 200-day EMAs are at 103.285 and 103.000, respectively. An ascending triangle pattern suggests a bullish bias, with potential for a breakout above the 103.292 pivot point, though slight bearish corrections may occur.

EUR/USD Technical Forecast

The EUR/USD pair, as of January 29, is exhibiting a subtle downtrend, currently priced at $1.08448, marking a decrease of 0.09%. On the 4-hour chart, the pivot point sits at $1.08478, serving as a critical junction for the currency pair. Resistance levels are identified at $1.08773, $1.09028, and $1.09342, which could hinder any bullish progression. Conversely, support levels at $1.08218, $1.07813, and $1.07413 provide potential areas for a rebound.

Technical indicators suggest a bearish sentiment below the pivot point. The 50-day and 200-day Exponential Moving Averages (EMAs) are positioned at $1.08787 and $1.09010, respectively, reinforcing the resistance levels.

The current chart pattern shows a downward channel, indicating a bearish trend. However, there’s a notable consolidation around the $1.08425 area, as the market seems to be in a holding pattern, awaiting substantial fundamental developments expected later in the week.

GBP/USD Technical Forecast

As of January 29, the GBP/USD pair exhibits a modest upward movement, currently trading at $1.27062, marking a slight increase of 0.03%. The 4-hour chart analysis reveals a pivot point at $1.27140, critical in determining the pair’s immediate direction. Above this level, the pair faces resistance at $1.27424, $1.27763, and $1.28139. These points could act as barriers to further upward movement.

Conversely, support levels are observed at $1.26615, $1.26369, and $1.25964, where the Pound may find a footing to counter potential declines. The 50-day Exponential Moving Average (EMA) stands at $1.27091, closely aligning with the current trading price, while the 200-day EMA is positioned at $1.26704, offering additional support. The presence of an upward trendline suggests support for Sterling around the $1.2700 area, indicating a potential bullish stance.

In conclusion, the GBP/USD pair’s trend appears bullish above the pivot point of $1.27140.

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