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EUR/USD, GBP/USD, DXY Price Forecast: Dollar Index Near $103; Bullish or Bearish?
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Key Points:
- German WPI fell to -0.3%, weighing on the euro, keeping EUR/USD in a tight range.
- Dollar Index gains 0.04%, with critical resistance at $103.568 and support at $103.034.
- GBP/USD hovers near $1.27662; key focus on UK employment and CPI data this week.
In this article:
Last week, EUR/USD saw mixed results following key economic data releases from Europe. The German Final CPI remained steady at 0.3%, as expected, while the Italian Trade Balance surprised with a narrower surplus of €5.07B against the forecast of €5.55B, down from the previous €6.38B.
Meanwhile, the German Wholesale Price Index (WPI) for August came in lower than anticipated, registering a -0.3% decline compared to the previous 0.2% increase.
This weighed on the euro, keeping EUR/USD in a tight range. Across the Atlantic, the Dollar Index was impacted by rising U.S. Cleveland Fed Inflation Expectations, which came in at 3.8%, and a significant increase in the Federal Budget Balance, which soared to—$254.3B, well above the previous—$66.0B.
Events Ahead
Looking ahead, GBP/USD will be closely watched as the UK releases key employment and inflation data. On Tuesday, the Claimant Count Change is expected to rise by 14.5K, down from the previous 32.3K. Wednesday’s CPI figures will be crucial, with the year-over-year rate forecasted to increase to 2.3%, up from 2.0%.
On the U.S. side, the focus will be on inflation as well, with Core PPI and PPI readings expected at 0.2%. Wednesday’s Core CPI and CPI data will be pivotal for the dollar, with both expected to show slight increases.
The Dollar Index could see further strength if these inflation numbers meet or exceed expectations, potentially putting pressure on both EUR/USD and GBP/USD as the week progresses.
Traders will also watch Thursday’s U.S. Retail Sales data and Unemployment Claims. Retail Sales are forecasted to grow by 0.4% after a flat reading last month.
The EUR/USD is trading at $1.09205, showing a slight increase of 0.02% in the 4-hour chart. The pair hovers near the pivot point at $1.09211, indicating a potential bullish trend if it holds above this level.
Immediate resistance is at $1.09550, with further resistance levels at $1.10094 and $1.10547. On the downside, support is seen at $1.08925, with additional levels at $1.08647 and $1.08267.
The 50-day EMA is positioned at $1.09011, providing near-term support, while the 200-day EMA at $1.08558 offers a more substantial base. A break below the pivot point could trigger a sharp sell-off.
GBP/USD Technical Forecast
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.
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