The US dollar’s recent strength has pressured major currencies, notably impacting the euro, British pound, and Australian dollar, each facing technical sell signals amid weak domestic data and dollar gains on strong inflation expectations. The euro and pound are constrained by weak economic indicators, while the yen remains under pressure despite Japan’s high inflation, as growth concerns loom. The Swiss franc, though depreciating, has seen relief for Swiss exporters. In Australia, slowing employment reinforces a bearish trend in the AUD. Meanwhile, gold remains subdued as investors favor the dollar, anticipating continued Fed hawkishness.
EUR/USD (Euro/US Dollar)
Market Sentiment and Influencing Factors: The EUR/USD pair has been under pressure due to a combination of strong US economic data and weaker European indicators. The recent US Producer Price Index (PPI) and core inflation data suggest that inflationary pressures remain, which supports the US dollar as the Federal Reserve may maintain a cautious approach to rate cuts. Eurozone weakness, particularly in manufacturing, has dampened the euro’s appeal, with the European Central Bank maintaining a dovish tone.
Technical Analysis and Levels:
- Support Levels: 1.0518, 1.0483
- Resistance Levels: 1.0593, 1.0664, 1.0714, 1.0766, 1.0795, 1.0857
- Outlook: The EUR/USD trend remains bearish with a potential test of the key support level at 1.0518. If breached, the pair could aim for 1.0485, which is a significant level. However, any positive inflation data or dovish hints from the Fed may provide relief for the euro, allowing a rebound toward 1.0593 and, potentially, 1.0664.
Forecast: Given current trends, the EUR/USD could remain within the 1.0483 to 1.0593 range. However, a break above 1.0654 could signal a potential reversal and higher consolidation toward 1.0714. Conversely, a continued decline below 1.0518 may extend the bearish trend to 1.0483 or lower.
GBP/USD (British Pound/US Dollar)
Market Sentiment and Influencing Factors: The GBP/USD pair faces downward pressure despite recent positive UK housing data, which indicated stronger-than-expected house price growth. The US dollar’s strength, spurred by robust inflation data and hawkish Fed sentiment, has weighed on the pound. Additionally, upcoming UK GDP data could play a critical role in shaping the pair’s direction.
Technical Analysis and Levels:
- Support Levels: 1.2662, 1.2598
- Resistance Levels: 1.2727, 1.2766, 1.2878, 1.2905, 1.2982, 1.3023
- Outlook: GBP/USD maintains a bearish trend, with resistance at 1.2727. A test and failure to break this level could signal further downside, with targets around 1.2598. However, a break above 1.2766 might open up the possibility for gains toward 1.2878.
Forecast: The GBP/USD pair is likely to consolidate within a bearish range between 1.2662 and 1.2727. Further weakness could see the pair drop to 1.2598, while stronger-than-expected UK GDP or dovish Fed signals could propel GBP/USD toward 1.2878.
USD/JPY (US Dollar/Japanese Yen)
Market Sentiment and Influencing Factors: The USD/JPY has been rising, reaching multi-week highs due to a robust US dollar and expectations of economic deceleration in Japan. The market is anticipating slower GDP growth, which may prompt the Bank of Japan (BoJ) to maintain an accommodative stance. The US inflation outlook further supports the dollar against the yen.
Technical Analysis and Levels:
- Support Levels: 155.15, 154.67, 153.71
- Resistance Levels: 156.32, 156.67
- Outlook: USD/JPY continues to trend higher, with a significant resistance level at 156.32. Should this level hold, a short-term retracement toward 155.15 is possible. Conversely, a break above 156.32 may propel the pair to 156.67.
Forecast: USD/JPY is likely to remain bullish, with a primary trading range between 155.15 and 156.32. However, any signs of a Fed pivot could initiate a retracement, especially if the pair breaches support at 154.67.
AUD/USD (Australian Dollar/US Dollar)
Market Sentiment and Influencing Factors: The AUD/USD pair has seen considerable weakness due to a softer Australian employment report and persistent concerns over inflation. Despite a strong labor market, Australian dollar sentiment has been dampened by reduced inflation expectations and an anticipated dovish stance by the Reserve Bank of Australia (RBA) at its upcoming meeting.
Technical Analysis and Levels:
- Support Levels: 0.6462, 0.6438, 0.6410
- Resistance Levels: 0.6504, 0.6528, 0.6570
- Outlook: The AUD/USD remains in a downtrend, with support at 0.6462. If broken, the next target will be 0.6410. Resistance around 0.6504 and 0.6570 may limit upside potential unless strong corrective factors emerge.
Forecast: Expect AUD/USD to trade within the 0.6462 to 0.6504 range. A break below 0.6410 could signal further declines, while any surprising dovish tone from the Fed may temporarily lift AUD/USD toward 0.6570.
USD/CHF (US Dollar/Swiss Franc)
Market Sentiment and Influencing Factors: The USD/CHF pair has been trading near multi-month highs, buoyed by the robust US dollar. The Swiss franc has weakened partly due to reduced safe-haven demand and export concerns, benefiting from recent dollar strength. However, the USD/CHF is facing resistance, which could signal potential consolidation or retracement.
Technical Analysis and Levels:
- Support Levels: 0.8819, 0.8757, 0.8633
- Resistance Levels: 0.8890, 0.9000, 0.9040, 0.9087
- Outlook: USD/CHF appears poised for a pullback at the 0.8890 level, especially if the DXY softens. A move above this level could open the path to 0.9000, while a decline may bring support at 0.8757 into focus.
Forecast: USD/CHF is likely to oscillate around 0.8819 to 0.8890. A break above 0.8890 could shift focus toward 0.9000, while a breach below 0.8819 may initiate a decline toward 0.8757.
XAU/USD (Gold/US Dollar)
Market Sentiment and Influencing Factors: Gold prices remain influenced by dollar strength and inflation expectations. Rising US inflation has boosted the dollar, while safe-haven demand has been modest. A dovish pivot by the Fed could, however, lead to a reversal in gold’s fortunes.
Technical Analysis and Levels:
- Support Levels: $1,920, $1,900, $1,875
- Resistance Levels: $1,945, $1,970, $1,985
- Outlook: Gold remains under pressure but has key support at $1,920. A break below this level could lead to $1,900. However, any signs of dollar weakness may allow a recovery toward $1,945 and beyond.
Forecast: XAU/USD is likely to trade between $1,920 and $1,945. Further dollar strength may push gold lower to $1,900, while a weaker dollar could catalyze a rise toward $1,970.
