US Dollar Forecast: Strong Consumer Confidence Data May Lift DXY – GBP/USD and EUR/USD Outlook

Market Overview

The US dollar gained momentum as New Home Sales exceeded expectations, rising to 698K versus the forecasted 669K and the previous 674K. This signals resilience in the housing market despite broader economic uncertainties.

Upcoming data, including Core Durable Goods Orders (0.4% forecast) and Consumer Confidence (105.7 forecast), will provide further direction.

A strong confidence reading could bolster the dollar, while weak manufacturing data may temper gains. Traders will watch Richmond Manufacturing Index (-13 forecast) closely for economic sentiment shifts.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at $107.869, up 0.41%, showing resilience despite signs of bearish pressure. The pivot point at $107.991 serves as a key level; staying above this could signal further upside with immediate resistance at $108.505 and next levels at $108.973.

However, failure to hold above the pivot could lead to declines, with immediate support at $107.428 and further downside risks targeting $106.700. A bearish crossover of the 50-day EMA ($107.834) below the 200-day EMA ($108.336) highlights growing selling pressure

Sterling Steady Ahead of BOE Bailey’s Speech

The British pound remained stable as the BRC Shop Price Index is expected to improve to -0.7% from -1.0%, signaling easing retail price pressures. Traders await BOE Governor Andrew Bailey’s speech, due on Wednesday, which could provide key insights into the UK’s economic outlook.

GBP/USD Technical Analysis

GBP/USD is trading at $1.24476, down 0.38%, as the pair continues to hold within an upward channel, signaling a bullish undertone. The pivot point at $1.24464 serves as a critical level, with a sustained move above this supporting a potential rally toward immediate resistance at $1.25047 and further gains targeting $1.25751.

On the downside, immediate support lies at $1.23757, with a break below risking a deeper decline to $1.22987. Technical indicators are mixed, with the 50-day EMA at $1.24040 and the 200-day EMA at $1.23641 acting as dynamic support levels.

Euro Slips as Lagarde Warns of Political Pressure on ECB

The euro weakened as ECB President Christine Lagarde cautioned that political interference could undermine central bank independence, leading to economic volatility. Lagarde’s remarks follow U.S. President Trump’s comments pressuring the Federal Reserve for rate cuts.

Meanwhile, Germany’s Ifo Business Climate Index improved to 85.1, exceeding forecasts, while Belgium’s NBB Business Climate declined to -13.6, signaling economic concerns. Investors now focus on Spanish Unemployment Rate (11.1% forecast), with further deterioration potentially weighing on the euro.

EUR/USD Technical Forecast

EUR/USD is trading at $1.04374, down 0.51%, as the pair remains under pressure within a downward channel. The pivot point at $1.04446 acts as a critical threshold; a sustained move above this level could signal a shift in momentum, targeting immediate resistance at $1.04934 and further gains toward $1.05321.

On the downside, immediate support is seen at $1.03841, with deeper declines possibly testing $1.03391.

Technical indicators suggest bearish momentum, with the 50-day EMA at $1.04437 and the 200-day EMA at $1.03844 reinforcing selling pressure. Traders should closely monitor the pivot point, as a break below support could intensify the downward trend while recovery hinges on breaking above $1.04446.