EUR/USD, GBP/USD, DXY Price Forecast: DXY Above $104; Market Awaits NFP

By:

Arslan Ali

Published: Aug 2, 2024, 07:12 GMT+00:00

Key Points:

BOE keeps rates steady at 5.00%, but split votes signal UK economic uncertainty.
US labor market softness weighs on Dollar Index, trading near $104.30 amid mixed sentiment.
GBP/USD bullish above $1.2720, but risks further decline if support levels break.

In this article:

EUR/USD

+0.18%

GBP/USD

+0.14%

Market Overview

On August 1, the Bank of England (BOE) held its interest rates steady at 5.00%, but the Monetary Policy Committee votes revealed a split, with some members favouring a hike to 5.25%.

This cautious stance, combined with BOE Governor Bailey’s remarks, suggests uncertainty in the UK economy, impacting GBP/USD. The pair has faced pressure as traders digest this indecision.

In the US, unemployment claims rose to 249K, higher than expected, adding to concerns about labor market softness. The ISM Manufacturing PMI fell to 46.8, missing forecasts and highlighting slowing economic momentum. These factors have kept the Dollar Index hovering around $104.30, reflecting mixed market sentiment.

Events Ahead

Looking ahead to August 2, the focus will shift to US labor market data. Average Hourly Earnings are expected to increase by 0.3%, aligning with the previous month’s growth.

However, Non-Farm Employment Change is projected to slow to 176K from 206K, while the unemployment rate is forecast to hold steady at 4.1%. These data points could significantly influence the EUR/USD and Dollar Index.

If the figures disappoint, the Dollar Index may face downward pressure, offering a potential lift to EUR/USD.

US Dollar Index (DXY)

Dollar Index Price Chart – Source: Tradingview

The Dollar Index is trading at $104.300, down 0.02%, reflecting mixed market sentiment. The 4-hour chart shows the pivot point at $104.429, with immediate resistance at $104.733, followed by $104.997 and $105.210. If the index breaks above these levels, it could signal a bullish trend.

Immediate support is at $103.978, with additional levels at $103.689 and $103.460. The 50-day EMA stands at $104.352, slightly below the 200-day EMA at $104.652, suggesting short-term bearish momentum.

The outlook remains bearish below $104.429, but a break above this level could trigger a more bullish trend. Traders should monitor these levels closely.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair is trading at $1.07958, up 0.05%, amid fluctuating market sentiment. The 4-hour chart highlights a pivotal resistance level at $1.08155. A break above this could signal bullish momentum, targeting resistance at $1.08484 and $1.08706.

However, if the price fails to break through, the pair may test support at $1.07773, with further levels at $1.07466 and $1.07201.

The 50-day EMA is at $1.08303, slightly above the 200-day EMA at $1.08257, indicating a potential bearish trend.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

The GBP/USD pair is trading at $1.27269, down 0.09%, reflecting cautious market sentiment. The 4-hour chart indicates a pivot point at $1.2720. A breach above this level could target resistance at $1.2778, followed by $1.2820 and $1.2887.

Immediate support is found at $1.2681, with further levels at $1.2653 and $1.2613. The 50-day EMA is at $1.2841, while the 200-day EMA is at $1.2821, suggesting potential downward pressure.

The outlook is bullish above $1.2720, but a break below this pivot could trigger further selling.

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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