EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – DXY Eases as Traders Eye PCE Data and Political Events

US Dollar (DXY)

The US Dollar Index (DXY) eased from a recent high, reflecting market reactions to potential currency interventions and economic data. Traders are closely watching the upcoming release of the U.S. personal consumption expenditures (PCE) price index, a key inflation gauge for the Federal Reserve. Additionally, political events, such as the first U.S. presidential debate, could influence the dollar’s trajectory. Market sentiment is mixed, balancing between the dollar’s safe-haven appeal and economic indicators that might signal future monetary policy adjustments.

Technically, the Greenback found resistance on the 4-hour chart inside 105.748 to 106.107, leading to today’s sell-off. Conversely, DXY is rebounding late in the session after a successful test of the 50-4-hour moving average at 105.392, leading to a robust technical bounce.

EUR/USD

The euro experienced a boost amid defensive positioning ahead of the French election and the first U.S. presidential debate. Despite recent gains, it remains under pressure for June. Political uncertainty looms as the far-right National Rally leads polls, potentially influencing market sentiment. The euro’s movement reflects market jitters about European political stability and its economic implications. Traders are closely monitoring these developments, as the outcome may impact fiscal policies and the euro’s strength against other currencies.

Technically, the EUR/USD is trying to establish support on the strong side of the support zone at 1.07265 to 1.07104. Earlier in the session, the single-currency tried to breakout over the 50-4-hour moving average at 1.07327, only to run out of enough buyers to sustain the move. Nonetheless, the Euro seems to have enough upside momentum to take another run to the upside later in the sesssion.

GBP/USD

Sterling showed resilience amid broader market movements, highlighting investor confidence possibly influenced by stable UK economic data and market positioning ahead of significant global political events. The pound’s performance will be closely watched as the British economy navigates post-Brexit adjustments and macroeconomic challenges. Traders are also considering the implications of potential policy shifts by the Bank of England, which could further impact sterling’s trajectory.

The British pound is currently trading within a resistance zone between 1.26713 and 1.26984. However, there is enough upward momentum to potentially challenge the downtrending 50-period moving average on the 4-hour chart at 1.27071. This level is crucial in the short term, as it serves as both potential resistance and a possible trigger point for acceleration toward the recent high of 1.27399.

USD/CAD

The USD/CAD is plunging on Monday ahead of a speech by Bank of Canada Governor Macklem and tomorrow’s Consumer Inflation reports. Headline inflation is expected to come in at 0.3% for the month, lower than the previously reported 0.5%. Core inflation is forecast to hold steady at 0.2% for the month. The Loonie is also being supported by higher gold and crude oil prices.

With the USD/CAD in a freefall, momentum traders are eyeing the nearest support zone at 1.36214 to 1.36005 as the next potential downside target. Meanwile, the selling is picking up speed as it pulls away from 50-4-hour resistance at 1.37180.

USD/JPY

The yen faced pressure, flirting with intervention levels, triggering warnings from Japanese authorities. After reaching significant highs, it briefly tumbled, highlighting market volatility. Japan’s Ministry of Finance remains vigilant but has not yet intervened. The yen’s decline, driven by the Bank of Japan’s stimulus policies and U.S. rate differentials, reflects ongoing challenges. The yen’s sensitivity to U.S. Treasury yields and the BOJ’s policy decisions will continue to influence its performance, with traders alert to potential intervention signals.

The USD/JPY is trading higher on Monday, consolidating just below it’s 4-hour high at 159.929. This level is a potential triggre point for an acceleration to the upside. Fear of an intervention, may however, prevent speculators from chasing it higher.

Key support is the former resistance zone at 158.500 to 158.001. This is followed by the uptrending 50-4-hour moving average at 157.993. A normal pullback into this support would likely attract buyers, but a sell-off fueled by an intervention would likely wipe it out, while putting 155.048 to 154.526 on the radar.