EUR/USD, GBP/USD, DXY Price Forecast: DXY Eyes Rebound Above $101; Bullish Retracement?

Market Overview

On Tuesday, the EUR/USD pair remained steady after Germany’s Producer Price Index (PPI) came in as expected at 0.2% m/m. The Euro was further supported by a stronger-than-expected Current Account surplus of €50.5B, surpassing forecasts of €37.0B.

Meanwhile, the Final Core CPI for the Eurozone stayed consistent at 2.9% y/y, as did the Final CPI at 2.6% y/y. These stable figures helped maintain the Euro’s position against the US Dollar.

Events Ahead

Looking forward, the focus shifts to the UK and the US. The GBP/USD pair could see volatility on Wednesday as the UK releases its Public Sector Net Borrowing figures, expected to be £2.2B, down from £12.6B in the previous month.

Later in the day, the US Dollar Index (DXY) will be influenced by the release of Crude Oil Inventories and the highly anticipated FOMC Meeting Minutes.

Market participants will closely watch these events for potential impacts on currency movements.

US Dollar Index (DXY)

The Dollar Index (DXY) is currently trading at $101.51, up by 0.07% on the 4-hour chart. After entering the oversold zone, the index has shown signs of a potential bullish reversal.

The formation of a recent bullish engulfing candle, followed by another bullish candle, suggests that upward momentum could strengthen above the $101.32 pivot point.

On the upside, the 23.6% Fibonacci retracement level is expected to offer resistance around $101.77, with the next resistance at the 38.2% Fibonacci level near $102.04.

Immediate support lies at $101.06, with additional support at $100.83 and $100.62. Bullish above $101.32; a break below this level could lead to a sharp selling trend.

EUR/USD Technical Forecast

EUR/USD is currently trading at $1.11150, down by 0.09% on the 4-hour chart. The pair is encountering solid resistance near the $1.1130 level, a crucial point where the overbought condition is evident.

The formation of a bearish engulfing candle near this level suggests that selling pressure might intensify if the price remains below $1.1130. Additionally, the 23.6% Fibonacci retracement level further supports the likelihood of a downward trend.

The 50-day EMA at $1.10159 and the 200-day EMA at $1.09130 are both below the current price, indicating that the long-term trend remains bullish, but short-term corrections are possible.

Bearish below $1.11310, with potential for further selling pressure. A break above this level could renew the bullish momentum.

GBP/USD Technical Forecast

GBP/USD is trading at $1.30187, down by 0.06% on the 4-hour chart. The pair is facing strong resistance near the $1.3050 level, highlighted by a double-top pattern, which typically signals a potential reversal.

The formation of a Doji followed by a bearish engulfing candle suggests that sellers may be gaining control, potentially driving the price lower. Immediate support is located at $1.2992, with further support at $1.2954 and $1.2924.

The 50-day EMA at $1.2901 and the 200-day EMA at $1.2833 indicate a bullish trend, but the immediate outlook may lean bearish if the price stays below $1.3053. Bearish below $1.3053; a break above this level could signal renewed bullish momentum.