EUR/USD, GBP/USD, DXY Price Forecast: Dollar Dives Under $103; Rebound Next?

By:

Arslan Ali

Published: Aug 5, 2024, 07:33 GMT+00:00

Key Points:

US dollar weakens as unemployment rises to 4.3%, impacting currency market trends.
European Services PMI reports could boost euro if figures surpass expectations this week.
US ISM Services PMI at 51.4 may influence the Dollar Index and market sentiment.

In this article:

EUR/USD

-0.08%

GBP/USD

-0.11%

Market Overview

Last week’s US economic data painted a mixed picture. Average hourly earnings rose by 0.2%, slightly below the expected 0.3%. Non-farm payrolls increased by only 114,000, far short of the anticipated 176,000, and the unemployment rate climbed to 4.3%, the highest since November 2021.

This combination of weaker job growth and rising unemployment suggests potential pressure on the US dollar, which fell to 102.921, down 0.23% in the Dollar Index.

Events Ahead

The focus this week shifts to the European Services PMI reports, which could shape the EUR/USD outlook. Strong PMI data from Spain, Italy, France, and Germany could boost the euro, especially if figures surpass forecasts. Meanwhile, the GBP/USD pair will be influenced by the UK Services PMI, with expectations set at 52.4.

The US ISM Services PMI, expected at 51.4, and upcoming Fed commentary will be pivotal for the Dollar Index. A stronger-than-expected ISM reading could support the dollar, reversing recent trends.

Market participants should closely watch these data releases, as they will likely dictate currency movements and market sentiment.

US Dollar Index (DXY)

Dollar Index Price Chart – Source: Tradingview

The Dollar Index is currently trading at $102.921, down 0.23% on the 4-hour chart, indicating bearish sentiment. The pivot point is set at $103.012, with immediate resistance at $103.364, followed by $103.723 and $104.132.

Support levels are marked at $102.359, $102.086, and $101.820. The 50-day EMA is at $104.066, and the 200-day EMA is at $104.553, both suggesting downward pressure below these averages.

The index remains bearish below $103.012, but a break above this pivot could shift the bias to bullish.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD is trading at $1.09086, down 0.13% on the 4-hour chart, maintaining a bearish stance. The pivot point is $1.09000, with immediate resistance at $1.09384, followed by $1.09705 and $1.09983. Key support levels are $1.08765, $1.08583, and $1.07811.

The 50-day EMA at $1.08483 and the 200-day EMA at $1.08309 suggest a bullish trend above $1.08580. A break below this support could trigger a sharp selling trend while maintaining above this level could sustain the bullish momentum.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

The GBP/USD is currently trading at $1.27427, up slightly by 0.01% on the 4-hour chart. The pivot point is set at $1.2710, with immediate resistance at $1.2775, followed by $1.2820 and $1.2862. Support levels are identified at $1.2681, $1.2653, and $1.2613.

The 50-day EMA is at $1.2829, while the 200-day EMA is at $1.2819, indicating a potential bearish trend if the price remains below these levels. A break below the pivot point of $1.2710 could trigger further selling pressure.

However, maintaining above this level might continue the bullish momentum as traders navigate market volatility.

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.

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