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US Dollar Forecast: Will Unemployment Claims Boost Momentum? Gold, GBP/USD and EUR/USD Outlook

By:
Arslan Ali
Published: Jan 1, 2025, 08:31 GMT+00:00

Key Points:

  • Lighter trading volumes as market awaits key unemployment and ISM PMI data later this week.
  • Labor market data on Thursday could shape the US Dollar’s short-term trajectory and influence broader market sentiment.
  • Gold trades above its 50 EMA at $2,618 but below the 200 EMA at $2,632, signaling cautious optimism.
US Dollar Forecast: Will Unemployment Claims Boost Momentum? Gold, GBP/USD and EUR/USD Outlook
In this article:

Market Overview

The US Dollar is experiencing subdued activity today due to a bank holiday, resulting in lighter trading volumes. However, significant economic events in the coming days are expected to shape market sentiment.

Key highlights include Unemployment Claims (forecast: 220K) and ISM Manufacturing PMI (forecast: 48.3), which will provide insights into the labor market and manufacturing sector’s health.

Additionally, December’s Pending Home Sales saw a notable rise of 2.2%, outperforming forecasts of 0.9%. With the Federal Reserve’s policy direction and manufacturing data in focus, the US Dollar’s short-term trajectory could hinge on upcoming reports, starting with Thursday’s unemployment data.

US Dollar Index (DXY) – Technical Analysis

Dollar Index Price Chart - Source: Tradingview
Dollar Index Price Chart – Source: Tradingview

The Dollar Index (DXY) is trading at $108.48, up 0.37%, signaling continued dollar strength amid cautious market sentiment. The pivot point at $108.53 serves as a crucial level, with immediate resistance at $108.90 and next at $109.35. On the downside, support is seen at $107.97, followed by $107.58.

Technically, the index trades above its 50 EMA at $108.12 and 200 EMA at $107.51, indicating a short- and long-term bullish trend. However, a double-top pattern near $108.53 adds resistance, limiting immediate upside momentum.

A break above $108.53 could drive further gains, while failure to clear this level may invite a retracement toward support zones.

GOLD Technical Analysis

Gold – Chart
Gold – Chart

Gold (XAU/USD) is trading at $2,624.26, up 0.17%, showing cautious optimism. Key resistance is at $2,643.41, while support lies at $2,602.31. Gold trades above its 50 EMA at $2,618.34 but remains below the 200 EMA at $2,632.83, highlighting mixed momentum.

The downward trendline near $2,628 is pivotal; a break above could drive bullish gains, while failure to hold may signal further declines.

GBP/USD Technical Analysis

GBP/USD Price Chart - Source: Tradingview
GBP/USD Price Chart – Source: Tradingview

The GBP/USD pair is trading at $1.25113, down 0.30% as the dollar shows strength, keeping pressure on the pound. The pivot point at $1.25067 acts as a key level, with immediate resistance at $1.25618 and further challenges at $1.26130. On the support side, $1.24762 provides the first safety net, followed by $1.24395.

A triple-bottom pattern near $1.25067 offers a glimmer of hope for bulls, but the pair’s position below the 50 EMA ($1.25476) and 200 EMA ($1.26075) suggests bearish sentiment dominates for now.

A sustained move above $1.25067 could reignite buying interest, while a break below risks sharp selling toward lower support levels.

EUR/USD Technical Forecast

EUR/USD Price Chart - Source: Tradingview
EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair is trading at $1.03549, down 0.49% as the dollar strengthens amid mixed market sentiment. The pivot point at $1.03448 is a critical threshold, with immediate resistance at $1.03923 and further barriers at $1.04490. On the downside, support is positioned at $1.03101, with deeper safety nets at $1.02782.

The 4-hour chart shows a developing triple-bottom pattern near the $1.03448 level, suggesting potential for a reversal if the pair holds above this area.

However, with the EUR/USD trading below both its 50 EMA ($1.04036) and 200 EMA ($1.04515), bearish momentum dominates the short-term outlook. A decisive break below $1.03448 could accelerate selling toward the next support levels.

About the Author

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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