US Dollar Forecast: DXY Nears 104.50; GBP/USD Adjusts to Recent UK GDP Outcomes

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Updated: Feb 15, 2024, 07:52 GMT+00:00

DXY approaches 104.50 as CPI data fuels Fed policy speculations, while GBP/USD adjusts to UK GDP outcomes, eyeing future economic indicators for direction.

Highlights

US Dollar faces resistance at 104.987, hinting at bullish trends if sustained above pivot 104.743.
EUR/USD shows bearish inclination below pivot 1.07440, with key resistance at 1.07770.
GBP/USD trends bearish below pivot 1.25741, resistance set at 1.26126, indicating crucial trend directions.

Dollar Soars on Strong CPI Data, Steering Fed’s Policy Outlook

The forex market today sees the US Dollar slightly down at $104.640, reflecting a 0.07% decrease. In the Eurozone, Flash Employment Change remained stable at 0.3% quarter-over-quarter, aligning with expectations and previous figures.

Similarly, Flash GDP showed no growth for the quarter, echoing the forecast and past performance. However, Industrial Production diverged, reporting a 2.6% month-over-month increase, significantly surpassing the -0.2% prediction and marking a departure from the previous 0.4% rise.

Across the Channel, the UK’s CPI year-on-year held at 4.0%, slightly below the anticipated 4.1%, with GDP figures revealing a contraction of 0.1% month-over-month against a forecasted -0.2%. Preliminary GDP quarter-over-quarter also contracted by -0.3%, more than the expected -0.1%.

Events Ahead

Looking forward, the market’s focus will shift to the US, with several key data releases:

Core Retail Sales and Retail Sales are expected to show varied changes of 0.2% and -0.2%, respectively.
The Empire State Manufacturing Index and Philly Fed Manufacturing Index forecast significant sectoral shifts.
Unemployment Claims and Industrial Production data will provide further insights into the US economy’s health.
Additionally, FOMC Member Waller’s speech and ECB President Lagarde’s testimony before the European Parliament will be closely monitored for their potential impact on currency valuations.

US Dollar Index (DXY)

Dollar Index

The Dollar Index is positioned at a pivot point of 104.743, the index faces immediate resistance levels at 104.987, followed by 105.283, and then at 105.504, which could limit upward movements. Conversely, support is established at 104.430, with additional levels at 104.095 and 103.733, potentially providing floors for any downward trends.

The technical landscape is further defined by the 50-Day Exponential Moving Average (EMA) at 104.283 and the 200-Day EMA at 103.610, suggesting a slight bullish bias above the pivot. This setup indicates that the Dollar Index may exhibit bullish tendencies if it sustains above 104.743, highlighting a crucial threshold for future price direction.

EUR/USD Technical Forecast

EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair is currently trading at 1.07350, marking a modest increase of 0.07% within the last 24 hours. Today’s pivot point is set at 1.07440, indicating a critical juncture for the currency pair. Immediate resistance levels are identified at 1.07440, followed by 1.07553, and a stronger barrier at 1.07770. On the downside, support can be found at 1.06937, with subsequent levels at 1.06772 and 1.06583.

The 50-Day Exponential Moving Average (EMA) at 1.07605 and the 200-Day EMA at 1.08320 provide further context, suggesting a slight bearish inclination below the pivot. Given these technical indicators, the EUR/USD’s overall trend appears bearish below 1.07440, warranting close monitoring for potential shifts in momentum.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

The GBP/USD pair is presently trading at 1.25561, reflecting a slight decline of 0.08% from the previous session. The currency pair finds its pivot point at 1.25741, serving as a key reference for traders. Resistance levels are staged at 1.26126, 1.26548, and 1.26832, outlining potential upward barriers. Conversely, support positions are identified at 1.25365, with further cushions at 1.25172 and 1.24910, marking zones where buyers might step in.

Technical indicators, including a 50-Day Exponential Moving Average (EMA) at 1.26095 and a 200-Day EMA at 1.26449, hint at a bearish bias below the pivot point. Given these metrics, the overall trend for GBP/USD leans bearish beneath 1.25741, indicating a critical threshold for trend direction.

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

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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