Advertisement
Advertisement

US Dollar Price Forecast: Weakens After Durable Goods Miss – Bond Yield and GBP/USD Outlook

By:
Arslan Ali
Published: Jan 29, 2025, 09:54 GMT+00:00

Key Points:

  • US Dollar weakens as Durable Goods Orders fall -2.2%, missing the 0.3% forecast and signaling economic slowdown.
  • Bond yields remain under pressure, with the US 10-year yield at 4.524%, struggling below key resistance at 4.537%.
  • Fed rate cut expectations rise as soft US data fuels concerns, potentially weakening the USD and boosting gold prices.
US Dollar Price Forecast: Weakens After Durable Goods Miss – Bond Yield and GBP/USD Outlook

In this article:

Market Overview

The US Dollar weakened following a disappointing -2.2% decline in Durable Goods Orders, missing the 0.3% forecast. Core Durable Goods Orders showed slight growth at 0.3%, yet still lagged expectations. Meanwhile, the CB Consumer Confidence index fell to 104.1, reflecting cautious sentiment amid economic uncertainty.

US 10-year bond yields remained under pressure as softer data raised concerns over economic momentum. The Richmond Manufacturing Index also missed forecasts, posting -4 versus the expected -13, suggesting manufacturing remains weak.

Investors are now eyeing upcoming trade balance and inventory data for further direction. The bond market may react to signals of slowing growth, which could impact the Federal Reserve’s future rate decisions and overall risk sentiment.

US Dollar Index (DXY) – Technical Analysis

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

The Dollar Index (DXY) is holding steady at $108.015, up 0.10%, as it extends its recovery following a breakout above a downward channel. The pivot point at $107.019 remains a key threshold; staying above this level reinforces bullish sentiment, while a break below could trigger fresh selling pressure.

Immediate resistance stands at $108.505, followed by $108.973, where buyers may face additional challenges. On the downside, support at $107.428 could act as a buffer before testing $106.960.

The 50-day EMA at $107.872 suggests continued upward momentum, while the 200-day EMA at $108.282 signals a strong resistance zone. If DXY holds above $107.019, a bullish push toward $108.505 is likely. However, failure to sustain gains may prompt a retest of support levels.

US 10-year Bond Yields

The US 10-year Treasury yield is trading at 4.524%, struggling below key resistance at 4.537% after a recent decline. The yield remains under pressure as it stays below both the 50-day EMA (4.569%) and 200-day EMA (4.599%), signaling a bearish trend.

This weakness reflects growing expectations of a Federal Reserve rate cut later in 2024, reducing real yields and weighing on the US Dollar Index (DXY). A further decline in yields could weaken the DXY, potentially supporting gold and risk assets.

However, if yields rebound, the USD may regain strength, pressuring commodities and emerging market currencies.

GBP/USD Technical Analysis

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

The GBP/USD pair is hovering around $1.24302, down 0.07%, as traders assess market conditions. Despite the minor dip, the pair remains above the pivot point at $1.24275, keeping a cautiously bullish tone. Immediate resistance at $1.25047 remains a key hurdle, with further upside potential toward $1.25751 if buying momentum strengthens.

On the downside, support at $1.23757 is a crucial level to watch, with a break below this potentially accelerating declines toward $1.23224. The 50-day EMA at $1.24188 is supporting the pair, while the 200-day EMA at $1.23738 underpins broader strength.

If GBP/USD holds above $1.24275, bulls could push for higher gains. A break below, however, may invite sellers into the market.

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.

Advertisement