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EUR/USD, GBP/USD, DXY Forecast: DXY Nears $104.45; More Downside Ahead?

By:
Arslan Ali
Updated: Jun 2, 2024, 10:21 GMT+00:00

Key Points:

  • Fed Chair Powell's speech had little impact, keeping USD and gold steady.
  • Safe-haven demand for gold rises amid geopolitical tensions involving Iran.
  • UK housing market shows cooling with Rightmove HPI m/m decline to 0.8%.
EUR/USD, GBP/USD, DXY Forecast: DXY Nears $104.45; More Downside Ahead?
In this article:

Market Overview

On Monday, May 20th, several key events influenced financial markets. Fed Chair Powell’s speech at 12:30 PM didn’t bring much volatility as he made no comments on monetary policy, keeping the USD and safe-haven assets like gold unchanged. The UK Rightmove HPI m/m showed a slight decline from 1.1% to 0.8%, indicating a cooling housing market.

Additionally, French and German bank holidays led to reduced volatility in EUR trading. Throughout the day, multiple FOMC members, including Bostic, Waller, Barr, Jefferson, and Mester, spoke, providing insights into future monetary policy and influencing USD movements and gold demand.

Events Ahead

Later in the day, MPC Member Broadbent’s speech at 2:00 PM will be crucial for the GBP, as any hints toward future rate changes could drive volatility. Further speeches by FOMC members Bostic, Waller, Barr, Jefferson, and Mester will provide more insights into the Fed’s policy stance, influencing the USD and gold.

Safe-haven demand for gold remains strong amid geopolitical tensions. Tragic incidents, such as the helicopter crash involving Iran’s President Ebrahim Raisi, have heightened geopolitical uncertainties. As a result, investors turn to safe-haven assets like silver.

US Dollar Index (DXY)

Dollar Index
Dollar Index

The Dollar Index is currently trading at $104.432, down 0.07%. The 4-hour chart highlights the pivot point at $104.399, a key level for near-term price action. Immediate resistance is at $104.598, followed by $104.763 and $104.920. On the downside, immediate support lies at $104.258, with further support at $104.072 and $103.856.

The 50-day Exponential Moving Average (EMA) is positioned at $104.661, while the 200-day EMA stands at $105.118, indicating a bearish trend. Holding above the $104.399 pivot point supports a bullish outlook, but a break below this level could trigger a sharp selling trend.

EUR/USD Technical Forecast

EUR/USD Price Chart - Source: Tradingview
EUR/USD Price Chart – Source: Tradingview

About the Author

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.

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