US Dollar Forecast: Will DXY Hold Above Key Support $104.95? Gold, GBP/USD and EUR/USD Outlook

USD Strengthens as Fed Holds Rate; Gold Remains Under Pressure

The U.S. Federal Reserve maintained the Federal Funds Rate at 4.75%, consistent with market expectations, as officials aim for stability amid inflation concerns. The Fed’s decision reinforced the dollar’s strength, pressuring gold prices lower. U.S. Consumer Credit fell to $6.0 billion, well below the $12.2 billion forecast, while consumer sentiment rose to 73.0, surpassing expectations.

Preliminary inflation expectations also slightly decreased to 2.6%. With the dollar holding strong, gold may continue facing challenges, particularly as U.S. Treasury yields remain high and the economic outlook favors the greenback. However, upcoming economic data releases may influence both assets in the near term.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is edging up at $105.03, gaining 0.08% with a bullish tone above the pivot level of $104.95. Holding this pivot point keeps sentiment positive, with immediate resistance at $105.21, followed by further levels at $105.44 and $105.67.

If the index dips below $104.95, it could face downward pressure, with key support at $104.66 and additional layers at $104.41 and $104.16.

The 50-day EMA at $104.62 provides a supportive base, while the 200-day EMA at $104.05 serves as a longer-term support. Overall, the index looks strong above $104.95, but a break below may signal a shift in momentum, making these levels critical for near-term direction.

Gold – Technical Analysis

Gold (XAU/USD) is trading lower at $2,672.70, down 0.44%, with key support at $2,668.55. A hold above this pivot could signal a bullish bounce, facing resistance at $2,683.83, $2,696.64, and $2,709.14.

A dip below $2,668.55 may indicate further downside, with support at $2,654.34 and $2,643.35. Overhead resistance is strong, as the 50-day EMA at $2,697.33 adds to the challenge.

Sterling Eyes CB Leading Index Data for Direction

The British pound (GBP) remains steady as investors await the release of the CB Leading Index m/m, scheduled for 7:30 p.m. on Monday. The previous reading held at 0.0%, and markets will watch for any signs of economic change.

With limited significant data releases, the GBP may remain subdued, though any unexpected shift in the index could influence short-term sentiment.

Traders will be monitoring the results for potential impact on Sterling.

GBP/USD Technical Analysis

GBP/USD is trading slightly up at $1.2919, with support from an upward trendline, and remains bullish as long as it holds above the pivot at $1.2901. Immediate resistance stands at $1.2948, with further barriers at $1.2976 and $1.3009.

A drop below the pivot could trigger a sharper decline, testing support at $1.2863 and $1.2834. The 50-day EMA at $1.2939 and the 200-day EMA at $1.2977 add significant overhead resistance, which could challenge further gains.

For now, sentiment leans bullish above $1.2901, but a break below would signal a shift, so keeping an eye on these levels is key for gauging GBP/USD’s next moves.

Euro Weakens Amid Poor French Trade and Italian Output Data

The Euro (EUR) faces pressure following mixed data from the Eurozone. French Trade Balance worsened, recording a deficit of €8.3 billion, below the forecast of €7.0 billion.

Italian Industrial Production fell by 0.4%, matching expectations, while Italian Retail Sales surprised on the upside, growing 1.2% against a forecast of 0.2%.

With a French Bank Holiday on Monday, the EUR may remain range-bound, lacking major market-moving events in the near term.

EUR/USD Technical Forecast

EUR/USD is holding a modest gain at $1.0721, up 0.03%, with key support at the pivot point of $1.0713. Staying above this level could keep the bullish sentiment alive, with immediate resistance ahead at $1.0729 and further levels at $1.0742 and $1.0755.

If the pair slips below $1.0713, it may prompt a sharper decline, with support at $1.0687 and $1.0668. The 50-day EMA, currently at $1.0775, along with the 200-day EMA at $1.0834, adds significant overhead resistance.