US Dollar Forecast: Focus Shifts to US Retail Sales, Gold, GBP/USD and EUR/USD Outlook

Gold Steady, US Dollar Gains Amid Mixed Economic Data

The US Dollar strengthened on Monday as economic data reflected mixed signals. The Empire State Manufacturing Index plunged to 0.2 from a previous 31.2, significantly missing the 6.4 forecast.

Conversely, the Flash Services PMI rose to 58.5, exceeding expectations, signaling robust activity in the services sector. However, manufacturing fell short at 48.3, below the forecast of 49.4.

Gold remained subdued around $2,653, facing downward pressure as the stronger dollar limited gains.

Traders now focus on Tuesday’s upcoming Retail Sales and Industrial Production data, which could impact both the US Dollar and gold’s direction in the short term.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at $106.89, up 0.03%, maintaining its bullish posture above the pivot point at $106.76. Immediate resistance lies at $107.19, with the next barrier at $107.51. On the downside, support holds at $106.42, closely aligned with the 200 EMA at $106.41.

The upward channel remains intact, supporting a bullish bias, while the 50 EMA at $106.77 reinforces strength near the pivot point. A sustained move above $106.76 could drive the index toward key resistance levels, fueled by dollar demand.

Gold – Technical Analysis

Gold (XAU/USD) trades at $2,651.40, down 0.05%, holding above the pivot point at $2,647.85. Immediate resistance lies at $2,672.71, with the 50 EMA at $2,666.98 and the 200 EMA at $2,661.33 capping gains.

A break below $2,647.85 could trigger sharper selling, while the upward trendline supports a potential rebound. Bulls need a decisive push above resistance to regain momentum, with the next key barrier at $2,693.50.

Sterling Gains as UK Earnings Rise, Job Market Steady

The British Pound (GBP) edged higher after stronger-than-expected Average Earnings Index, rising to 5.2% from a previous 4.3%, beating the 4.6% forecast. The Claimant Count Change eased significantly to 0.3K, down from last month’s 28.2K, indicating a stabilizing labor market.

Meanwhile, the Unemployment Rate remained unchanged at 4.3%, matching expectations. With no UK data ahead, markets will shift focus to US Retail Sales for short-term directional cues.

GBP/USD Technical Analysis

GBP/USD is trading at $1.26972, up 0.12%, as the pair hovers above the pivot point at $1.26663. Immediate resistance sits at $1.27375, with further upside capped by the next barrier at $1.27977. On the downside, support emerges at $1.26046, followed by a deeper floor at $1.25255.

The 50 EMA at $1.26847 aligns closely with current prices, signaling near-term strength, while the 200 EMA at $1.27048 offers overhead pressure. A sustained move above $1.26663 reinforces bullish momentum, targeting the next resistance levels.

However, a break below the pivot could flip sentiment sharply bearish, exposing lower supports. For now, GBP/USD retains a slight bullish bias above $1.26663.

Euro Mixed as German PMI Weakens, Services Improve

The Euro (EUR) traded cautiously after weak French and German Manufacturing PMIs, with figures at 41.9 and 42.5, respectively, missing forecasts. However, services data surprised positively: French Services PMI rose to 48.2, and German Services PMI jumped to 51.0, beating expectations.

The overall Flash Services PMI reached 51.4, signaling steady growth. Markets now focus on Tuesday’s German Ifo Business Climate and ZEW Economic Sentiment, which could drive near-term Euro movement.

EUR/USD Technical Forecast

The EUR/USD is trading at $1.05065, down 0.04%, and remains under pressure below the pivot point at $1.05230. The pair faces immediate resistance at $1.05558, coinciding with the 200 EMA at $1.05350, which acts as a ceiling. Further upside targets sit at $1.05940.

On the downside, support emerges at $1.04739, with a break lower exposing $1.04341. The 50 EMA at $1.05066 aligns closely with current prices, adding to the pair’s indecision. A downward channel persists, capping gains near $1.05230.

In summary, EUR/USD remains bearish below $1.05230. A breakout above this level could shift sentiment, while failure keeps sellers targeting support levels. Watch for a close outside the channel to confirm the next move.