EUR/USD, GBP/USD, DXY Price Forecast: USD Strengthens to $104.29 Amid 2.8% GDP Rise

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.