EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts – DXY Hits Multi-Month High

US Dollar (DXY)

The dollar strengthened, reaching its highest level since May against a basket of currencies. Traders are focused on upcoming PCE inflation data, which could influence Fed rate cut expectations. The wide interest rate gap between the U.S. and other countries continues to attract investors, supporting dollar strength against major currencies.

The U.S. Dollar Index chart shows a strong uptrend, with the price recently breaking above key resistance levels at 105.748 and 106.017. The index is trading above its 50-day moving average, indicating bullish momentum. The RSI is in overbought territory at 68.15, suggesting strong buying pressure. Overall, the chart depicts a robust dollar strengthening against other major currencies. If the upside momentum continues then look for a test of 106.617.

EUR/USD

The euro weakened against the dollar following comments from ECB policymaker Olli Rehn suggesting two more rate cuts this year. This contrasts with the Fed’s stance, where rate cuts are not expected in 2023. The diverging monetary policy outlooks between the ECB and Fed are driving the euro’s performance against the dollar.

The EUR/USD 4-hour chart shows a bearish trend below the 50-period MA (1.07167). The RSI at 38.21 indicates bearish momentum but approaches oversold. Recent strong bearish candles suggest continued downward pressure. Watch for potential reversals at support levels or if RSI becomes oversold. Short-term outlook remains bearish.

GBP/USD

Sterling dipped against the strengthening dollar as markets await key U.S. economic data. The pound has been one of the best-performing currencies this year, supported by expectations of fewer rate cuts from the Bank of England compared to other central banks. Political stability expectations linked to the upcoming election also underpin sterling’s resilience.

The GBP/USD chart shows a bearish trend with the price below the 50-day moving average, indicating a downward intermediate trend. Current support lies around 1.2620, with resistance at 1.2671. The Relative Strength Index (RSI) at 33.82 suggests the pair is approaching oversold territory, potentially signaling a near-term rebound.

USD/CAD

The Canadian dollar showed mixed performance, easing against the U.S. dollar. A potential contraction in wholesale trade for May is weighing on the currency. Investors are focused on upcoming economic data, including GDP figures and U.S. PCE inflation, which could impact the loonie’s direction in the near term.

The USD/CAD chart shows a short-term upward movement, approaching resistance at 1.3700 near the 50-day moving average. Support lies at 1.36214 to 1.36005. The Relative Strength Index (RSI) at 56.37 suggests moderate momentum without being overbought. A break above the moving average could signal further gains, while failure to breach it may lead to a reversal.

USD/JPY

The yen plummeted to its lowest level since 1986 against the dollar, driven by the substantial interest rate differential between Japan and the U.S. Despite warnings of potential intervention from Japanese authorities, the currency continues to weaken. Traders are testing the resolve of Japan’s Ministry of Finance and central bank.

The USD/JPY chart shows a strong upward trend, with the price breaking above resistance at 159.93. Currently trading at 160.62, it stays well above the 50-day moving average, indicating bullish momentum. The RSI at 76.98 signals overbought conditions, suggesting a potential pullback or consolidation in the near term before continuing the uptrend.