EUR/USD, GBP/USD, DXY Price Forecast: CPI Data and Fed’s Rate Decision to Determine Market Sentiment This Week

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Published: Mar 18, 2024, 07:45 GMT+00:00

Key Points:

Dollar Index remains in focus after UoM Consumer Sentiment at 76.5, inflation expectations at 3.0%.
EUR/USD awaits crucial CPI data, with Final Core CPI at 3.1% and Trade Balance expected at 14.2B.
GBP/USD looks for domestic cues; Rightmove HPI suggests a strengthening housing market, supporting the Pound.

Market Overview

The dollar index’s performance, reflecting the USD’s strength against a basket of currencies, remains a focal point after the latest consumer sentiment and inflation expectations data released last Friday showed a preliminary University of Michigan Consumer Sentiment at 76.5 and inflation expectations steady at 3.0%.

Events Ahead

For the EUR/USD pair, the forthcoming week promises crucial data releases with the Final Core CPI year-over-year and Final CPI year-over-year both expected to hold at 3.1% and 2.6%, respectively. Additionally, the Trade Balance is anticipated to come in at 14.2 billion.

The GBP/USD exchange rate awaits domestic cues from the UK’s economic docket, although no significant releases are scheduled imminently. Earlier today, Rightmove HPI month-over-month increase at 1.5% suggests a firming housing market, which could lend some support to the Pound.

However, the broader narrative for both currency pairs will likely be influenced by the USD side of the equation, with the Federal Reserve’s announcements on the Federal Funds Rate and economic projections set to capture the market’s attention.

US Dollar Index (DXY)

Dollar Indexa

In today’s technical outlook, we focus on the Dollar Index, which currently stands at 103.461, marking a slight increase of 0.01%. The key pivot point for today is set at $103.365, serving as a critical juncture for future price movements.

Notably, the immediate resistance is identified at $103.634, with subsequent barriers at $103.932 and $104.295, respectively. Conversely, support levels are positioned at $103.107, $102.733, and $102.355, outlining potential fallback zones.

The 50-Day Exponential Moving Average (EMA) lies at 103.215, slightly below the current price, while the 200-Day EMA is observed at 103.516, hinting at a closely contested trading environment.

The overarching trend appears bullish above the $103.365 mark, suggesting that surpassing this level could foster a positive trajectory.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair has slightly retreated by 0.01%, positioning itself at 1.08863. It’s pivot point stands at the $1.0874 mark, serving as the day’s cornerstone for directional bias.

Looking upward, resistance levels are staged at $1.0904, $1.0930, and $1.0964, delineating the hurdles for potential bullish advances. Conversely, should the pair stumble, support lies waiting at $1.0844, followed by $1.0821 and $1.0800, marking territories for bearish defense.

The 50-Day Exponential Moving Average at 1.0901 marginally eclipses the current price, whereas the 200-Day EMA at 1.0862 underpins it. This setup suggests a cautiously bullish stance above $1.0874, yet a descent below this threshold may ignite a sharper selling momentum.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

Today’s focus is on the GBP/USD pair, which slightly decreased by 0.01%, currently at 1.27310. The pivot point for the day is established at $1.2755, a critical level that investors should monitor closely. Resistance is observed at $1.2788, followed by $1.2824 and $1.2864, indicating potential upward movement thresholds.

On the downside, support levels are identified at $1.2699, $1.2657, and $1.2617, which could halt further declines. The 50-Day Exponential Moving Average (EMA) at 1.2759 suggests a near-equilibrium state with the current price, while the 200-Day EMA at 1.2700 provides a slight bullish undertone.

The overall trend is bearish below $1.2755, but a breakout above this level may introduce a stronger bullish sentiment. Conversely, maintaining below this pivot could confirm the bearish outlook.

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.