EUR/USD, GBP/USD, DXY Forecast: DXY Gains Support Near $104.70; What’s Next?

By:

Arslan Ali

Published: May 27, 2024, 07:27 GMT+00:00

Key Points:

German Q1 GDP steady at 0.2%, providing stability to the euro.
UK Retail Sales dropped 2.3%, significantly pressuring the pound.
U.S. markets closed for Memorial Day, limiting trading activity.

In this article:

EUR/USD

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GBP/USD

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Market Overview

On Friday, May 24, significant economic data impacted the forex market. The German Final GDP for Q1 remained steady at 0.2%, aligning with expectations and providing stability to the euro. However, UK Retail Sales showed a significant decline of 2.3% month-on-month, far worse than the anticipated -0.5%, pressuring the pound.

Meanwhile, in the U.S., Core Durable Goods Orders increased by 0.4%, beating the expected 0.1%, and Durable Goods Orders rose by 0.7%, exceeding forecasts of a 0.9% decline.

These positive data points, along with an upward revision in the University of Michigan Consumer Sentiment to 69.1, supported the dollar.

Events Ahead

Looking ahead to Monday, May 27, market activity will be influenced by several key events. In Europe, the German Ifo Business Climate index is expected to rise to 90.4 from 89.4, potentially providing support to the euro. The Belgian NBB Business Climate is also projected to improve, rising to -10.8 from -11.9, which could further bolster the euro.

In the UK, the BRC Shop Price Index year-on-year is anticipated to come in at 0.8%, which may offer some insights into consumer price trends amidst a bank holiday. In the U.S., markets will be closed in observance of Memorial Day, limiting trading activity.

US Dollar Index (DXY)

Dollar – index

The Dollar Index is trading at $104.712, down 0.03%. The pivot point at $104.641 is critical for market direction. Immediate resistance levels are $104.823, $104.980, and $105.125. Support levels are $104.481, $104.268, and $104.082.

Technical indicators show the 50-day Exponential Moving Average (EMA) at $104.810 and the 200-day EMA at $105.005, indicating a bearish trend as the price is below both key moving averages.

The outlook remains bullish above $104.641, but a break below this level could trigger a sharp selling trend.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

EUR/USD is trading at $1.08485, up 0.02%. The pivot point at $1.08418 is crucial for market direction. Immediate resistance levels are $1.08581, $1.08702, and $1.08844. Support levels are $1.08281, $1.08132, and $1.07978.

Technical indicators show the 50-day Exponential Moving Average (EMA) at $1.08349 and the 200-day EMA at $1.07918, suggesting a bullish trend. The current price is above both key moving averages, indicating potential upward momentum.

The outlook remains bullish above $1.08418, but a break below this level could trigger a sharp selling trend.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: TradingView

GBP/USD is trading at $1.27412, up 0.06%. The pivot point at $1.2750 is crucial for market direction. Immediate resistance levels are $1.2793, $1.2824, and $1.2864. Support levels are $1.2718, $1.2674, and $1.2645.

Technical indicators show the 50-day Exponential Moving Average (EMA) at $1.2687 and the 200-day EMA at $1.2605, indicating a bullish trend. The current price is above both key moving averages, suggesting potential upward momentum.

The outlook is bearish below $1.2750, with a break above this level potentially boosting bullish sentiment.

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

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.