EUR/USD, GBP/USD, DXY Price Forecast: DXY Climbs to 105.50, Eyes on Fed Talks

By:

Arslan Ali

Published: May 8, 2024, 07:49 GMT+00:00

Key Points:

U.S. Consumer Credit plummeted to $6.3 billion, signaling a cutback in consumer spending.
German Industrial Production dropped by 0.4%, reflecting persistent economic challenges.
Italian Retail Sales are projected to slightly increase from 0.1% to 0.2% month-over-month.

In this article:

EUR/USD

-0.17%

GBP/USD

-0.21%

Market Overview

In recent financial developments, the U.S. Consumer Credit report showed a notable decrease to $6.3 billion, falling significantly short of the previous $15.0 billion. This drop suggests a tightening in consumer spending, which could have broader implications for economic growth.

Meanwhile, German Industrial Production contracted by 0.4% month-over-month, a more significant decline than the anticipated 0.6% decrease, highlighting ongoing challenges in Europe’s largest economy.

Events Ahead

Notably, Italian Retail Sales are expected to show a modest increase, rising from 0.1% to 0.2% month-over-month, indicating a slight improvement in consumer activity within the eurozone.

For the GBP/USD, the focus shifts to the Bank of England (BoE) with several pivotal releases scheduled for May 9. The BoE will deliver its Monetary Policy Report, Monetary Policy Summary, and MPC Official Bank Rate Votes, currently forecasted at 0-1-8 from the previous 0-0-9.

Additionally, the Official Bank Rate is expected to hold steady at 5.25%, with BoE Governor Bailey set to speak, potentially providing further insights into future monetary policy directions.

US Dollar Index (DXY)

Dollar Index

The Dollar Index is up by 0.16% at 105.50, hovering above the pivotal point at 105.41. Key resistance levels are at $105.89, $106.15, and $106.48, while initial support is at $105.04.

Technical analysis shows the 50-day EMA at 105.48 and the 200-day EMA at 105.20. A sustained position above 105.41 encourages bullish sentiment, while a break below it could prompt a reversal in trend.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair slipped slightly to $1.07452, marking a decrease of 0.11%. The currency pair finds its pivot point at $1.07382, with resistance levels positioned at $1.07778, $1.08124, and $1.08533, which could restrict further gains. Conversely, immediate support lies at $1.06951, with additional supports at $1.06512 and $1.06119, essential for cushioning any potential downturns.

Technical indicators show the 50-day Exponential Moving Average (EMA) closely aligned at $1.07338, just below the pivot, while the 200-day EMA is slightly above $1.07462. The configuration suggests a balanced market environment but leans towards bullish potential above $1.07382.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

The GBP/USD pair experienced a slight decrease, trading down by 0.21% at $1.24889 with its pivot point at $1.24668. Resistance levels are clearly defined at $1.25318, $1.25924, and $1.26347, which could cap upward momentum. Conversely, support levels are set at $1.24230, followed by $1.23797 and $1.23349, serving as potential bounce-back points during further declines.

The 50-day and 200-day Exponential Moving Averages suggest a slightly bearish sentiment. A move above the pivot point could signal a bullish shift, while a drop below may trigger intensified selling. The $1.24668 level is important in the current trading environment.

For a look at all of today’s economic events, check out our economic calendar.

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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