The market is still moving sideways, but the overall situation isn’t looking very enticing anymore.
Today would be a good time to check out the Forex market, specifically how you’re trading DXY, EURUSD, GBPUSD, and XAUUSD.
US Dollar Index (DXY) Outlook
DXY seems to be at a crucial point. It recently rebounded from the 97.70 support level and made its way up to 98.20 on Tuesday. However, it’s under pressure today with DXY testing a new support level at 98.10—the same price that has become the upper boundary of a downtrend since August 1.
If the DXY bulls can maintain the position above 98.10, we might see further declines in the dollar. Key resistance levels to watch would be around 98.50/60 and 99.35.
On the flip side, if it fails to hold above 98.10, it would indicate a further weakening of the dollar.
EURUSD Projection
EURUSD broke through the trendline from August 5 on Tuesday after hitting a level of 1.1691. Yet despite the selling pressure, EURUSD remains relatively stagnant.
While the Euro does appear technically bearish, it’s not a significant timeframe below 1.1680. The reverse applies to DXY, as it remains strong above 98.10. Naturally, things might shift as we approach the PMI data from Europe this Thursday.
Given the uncertainty and the potential risks surrounding Thursday’s reports, sitting on the sidelines could be wise. Forcing a trade right now may not be ideal—waiting for clearer signals from EURUSD might yield better opportunities.
GBPUSD Forecast
GBPUSD seems to be on a much weaker path compared to the Euro. We talked about a breakdown under 1.3520 in Monday’s video, and the level of 1.3529 could act as a sort of “magnet” for resistance.
Sure enough, Tuesday’s peak was just slightly above that imbalance before GBPUSD targeted the support around 1.3470. It has seen some interest at this level since August 11, but the bounce back hasn’t been convincing.
If it dips below 1.3465 on a 4-hour closing basis, we could see the 1.3384 level as the next target. Just keep in mind that this support level might stretch further down to 1.3450 when viewed on a daily chart.
Gold (XAUUSD) Review
Gold showed some signs of recovery on Wednesday. Still, the US dollar regained some strength this week, leading to mixed signals in XAUUSD.
Typically, gold and the dollar have an inverse relationship, making it tough for DXY to stay above 98.10 while being bullish on gold.
Additionally, there’s a sell-side mismatch at $3,305. Gold approached that level on Tuesday but failed to break below $3,311.
With all this, we saw gold testing the lower range on Tuesday, and it really needs to hold above $3,335 on a 4-hour basis to stay strong.
