Most read: USD Outlook and Market Sentiment: USD/JPY, USD/CAD, USD/CHF
The US dollar, as measured by the DXY index, rose last week and closed on Friday at its highest level since mid-February. The dollar rallied against the backdrop of shifts in global interest rate expectations, despite initially falling after the Federal Reserve ruled out new inflation risks and suggested it was on track for 75 basis points of easing this year. The price reversed and rose over the next two days.
US dollar index weekly chart
sauce: TradingView
The Bank of England’s dovish stance at its March meeting, combined with the Swiss National Bank’s surprise interest rate cut, means other major central banks will ease policy sooner than the FOMC given the more fragile situation in their economies. This has fueled speculation that this may be the case. For example, the European Central Bank could be one of them.
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Looking ahead to potential catalysts, the highlight of next week’s US economic calendar will be the release of the Fed’s preferred inflation measure, the core PCE deflator. The true reaction to the data may not be fully clear until Monday, as many international markets are closed on Good Friday. Nevertheless, volatility may still emerge due to reduced liquidity.
Focusing on the upcoming PCE report, the core price index measure is expected to rise 0.3% month-on-month in February, with the 12-month reading unchanged at 2.8%. This better-than-expected result should be bullish for the dollar, and US policymakers may have to wait a little longer before shifting to an accommodative stance.
Upcoming US PCE data
sauce: DailyFX Economic Calendar
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EUR/USD Forecast – Technical Analysis
EUR/USD has fallen sharply in recent days, breaking both trendline support and the 200-day simple moving average at 1.0835, suggesting a bearish turn. If losses accelerate over the next week, a major technical floor to watch will emerge at 1.0800. Below this area, all eyes will be on 1.0725.
On the other hand, if the bulls start to counterattack and cause a pullback, then resistance could be identified at the 1.0835-1.0850 band. A bullish move above this range will focus attention on the 100-day simple moving average, followed by 1.0890 and 1.0925 if the strength continues.
EUR/USD price action chart
EUR/USD chart created using TradingView
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USD/JPY Forecast – Technical Analysis
USD/JPY has surged this week and is close to retesting the 2023 high around 152.00. If this resistance is broken, the Japanese authorities could step in to support the yen, which could make the rally unsustainable. However, absent currency intervention, a breakout could lead to a move towards 154.40.
Conversely, if the sellers come back and are successful in pushing the price lower, subsequent technical support will approach 150.90 and 149.75. In the event of a decline, the price may stabilize around this level, but in the event of a breakout, the possibility of a decline towards the 50-day simple moving average of 148.90 cannot be ruled out.
USD/JPY price action chart
USD/JPY chart created using TradingView
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|
change |
long |
shorts |
OI |
| every day | 8% | -9% | 1% |
| weekly | twenty five% | -28% | 0% |
GBP/USD Forecast – Technical Analysis
GBP/USD has fallen sharply this week, breaching key levels in the process, including the 50-day simple moving average at 1.2700 and the key trendline at 1.2675. If losses continue in the short term, you should pay particular attention to the 200-day SMA of 1.2600. A break below this could lead to a fall towards 1.2520.
Conversely, in a scenario where sentiment brightens and cable TV stages a reversal, subsequent resistance thresholds could be identified at 1.2675 and 1.2700. The bulls may have a hard time removing these barriers, but if they can override them, there will be little obstacle to reclaiming the 1.2800 mark.
GBP/USD Price Action Chart
GBP/USD chart created using TradingView
