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EUR/USD, GBP/USD, DXY Price Forecast: USD Strengthens to $104.29 Amid 2.8% GDP Rise
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Key Points:
- German ifo Business Climate index fell to 87.0, impacting EUR/USD performance negatively.
- Spanish Unemployment Rate expected to drop to 11.3%, potentially boosting the euro.
- US data to watch: Core PCE Price Index (0.2% rise) and Personal Income growth (0.4%).
On July 25, the German ifo Business Climate index dipped to 87.0 from 88.6, slightly below the forecast of 88.9. This negative sentiment impacted the EUR/USD, which struggled to maintain gains. Meanwhile, in the US, the Advance GDP for Q2 surged to 2.8%, surpassing expectations of 2.0% and the previous 1.4%.
This strong economic growth, coupled with a decline in unemployment claims to 235K, bolstered the USD. The Advance GDP Price Index fell to 2.3% from 3.1%, while Core Durable Goods Orders rose by 0.5%, exceeding the forecast of 0.2%.
The Dollar Index reflected these mixed signals, closing at $104.288, down 0.11%. The drop in the durable goods orders by 6.6% compared to the forecast of 0.3% suggested underlying economic challenges, tempering the dollar’s strength.
Events Ahead
Looking ahead to July 26, the Spanish Unemployment Rate is expected to decrease to 11.3% from 12.3%, potentially strengthening the euro. Key US data includes the Core PCE Price Index, forecast to rise by 0.2%, and Personal Income, which is expected to grow by 0.4%. Personal Spending is projected to increase by 0.3%.
These figures will likely influence the Dollar Index, with the revised UoM Consumer Sentiment expected to inch up to 66.3 from 66.0, and Inflation Expectations stable at 2.9%.
The market will focus on how these economic indicators impact the Federal Reserve’s policy direction, particularly given expectations of a potential rate cut in September.
The 50-day EMA stands at $104.349, and the 200-day EMA is at $104.754. The outlook remains bearish below $104.352, with potential for further declines.
However, a break above this pivot point could shift the bias towards a more bullish trend.
EUR/USD Technical Forecast
On the 4-hour chart, EUR/USD is trading at $1.08574, up 0.11%. The pivot point is $1.08674. Immediate resistance levels are $1.09033, $1.09216, and $1.09448. Immediate support levels are $1.08246, $1.08052, and $1.07818. The 50-day EMA is $1.08659, and the 200-day EMA is $1.08279.
The RSI is at 48, indicating neutral sentiment. The outlook is bearish below $1.08674, but a break above this level could turn the bias bullish. Conversely, staying below this level may lead to further declines.
GBP/USD Technical Forecast
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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