EUR/USD, GBP/USD, DXY Price Forecast: DXY Recovers Above $105; Buy Now?

By:

Published: May 10, 2024, 07:50 GMT+00:00

Key Points:

U.S. unemployment claims exceeded expectations, rising to 231K, indicating a potential economic slowdown.
GBP shows mixed economic signals with a surprise GDP growth of 0.6% but declining construction output.
Upcoming FOMC member speeches and key economic reports are set to shape future market trends.

EUR/USD, GBP/USD, DXY Price Forecast: DXY Recovers Above $105; Buy Now?

Market Overview

In the United States, unemployment claims unexpectedly rose to 231K, surpassing forecasts and previous figures of 212K and 209K, respectively. This data indicates a potential slowdown in the U.S. labour market.

For the GBP, recent economic reports show a mixed picture. Monthly GDP growth was better than expected at 0.4%, compared to a forecast of 0.1%. Preliminary quarterly GDP also exceeded expectations, posting a 0.6% increase against an anticipated 0.4%.

However, construction output declined by 0.4% month-over-month, contradicting the previous increase of 0.8%. The goods trade deficit widened slightly to -£14.0 billion from -£14.5 billion.

Additionally, the Index of Services increased to 0.7% over three months, signaling modest growth in the service sector. Industrial and manufacturing production showed slight improvements, with changes of 0.2% and 0.3%, respectively, suggesting some resilience in these sectors.

Events Ahead

The U.S. economic calendar features speeches by FOMC members Bowman and Barr, which could provide insights into future monetary policy. The preliminary University of Michigan Consumer Sentiment for May is expected at 76.3, slightly below the previous 77.2, indicating a potential dip in consumer confidence. Additionally, preliminary inflation expectations are set at 3.2%.

In Europe, the ECB will release its Monetary Policy Meeting Accounts, which could shed light on the future direction of Eurozone monetary policy. For the GBP, MPC members Pill and Dhingra are scheduled to speak, potentially influencing market expectations regarding the Bank of England’s monetary policy. Also, the NIESR will release its GDP estimate for the UK, projected at 0.4%, providing further clarity on the economic outlook.

US Dollar Index (DXY)

Dollar Index

In today’s session, the Dollar Index is slightly up by 0.10%, currently trading at 105.306. Positioned just below its pivot point at $105.490, the index shows potential for fluctuating market direction. Resistance levels are marked at $105.747, $105.914, and $106.146, which might restrain further gains if approached. Support is present at $105.195, with more significant levels following at $104.938 and $104.640, which are essential for preventing steeper declines.

Technical indicators, including the 50-day EMA at 105.396 and the 200-day EMA at 105.485, hover near the current price, suggesting a tight trading range. The index’s future movement will hinge on breaking the pivotal $105.490 level; a climb above could signal bullish trends, while failure to surpass may invite bearish dynamics.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

Today’s EUR/USD market sits at $1.07763, marking a slight decline of 0.05%. The currency pair finds its pivot at $1.07511, which serves as a critical juncture for determining future movements. Resistance levels loom at $1.08115, $1.08464, and $1.08816, challenging any northward price actions.

Conversely, supports are established at $1.07018, $1.06512, and $1.06119, which could stabilize declines. The 50 and 200-day Exponential Moving Averages, both around $1.07440 and $1.07477, respectively, suggest the market is at a crossroads.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: TradingView

The GBP/USD is slightly down by 0.05%, positioning at $1.25197. The currency pair’s pivotal point is at $1.25046, suggesting cautious market sentiment. Immediate resistance levels are identifiable at $1.25676, $1.26328, and $1.26965, which may pose challenges for bullish movements.

Conversely, support levels are found at $1.24459, $1.24032, and $1.23475, offering potential floors to counteract bearish pressures. The 50-day and 200-day Exponential Moving Averages are stationed at $1.25148 and $1.25406, respectively, hovering around the current price, indicating a balanced but delicate market condition.

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

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.