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US CPI, Fed Decision to Guide US Dollar, Setups on EUR/USD, USD/JPY, GBP/USD – DailyFX

US dollar forecast – EUR/USD, USD/JPY, GBP/USD

  • of USD Volatility is likely to increase this week as there are several events that will have a big impact on the economic calendar.
  • Market focus will be on the US inflation Tuesday's data and the Fed Financial policy Wednesday's announcement
  • In this article: euro/usd, USD/JPY and GBP/USDwe discuss the key price levels to watch in the coming days.

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The economic calendar for the coming week is packed with events that will have a big impact on the US dollar, but the most important one that could help determine its near-term course is the November US consumption forecast, which will be released on Tuesday morning. The consumer price index report and the US Federal Reserve's monetary policy announcement are scheduled for Wednesday afternoon.

The Fed's interest rate outlook has turned dovish over the past month, with markets pricing in about 100 basis points of easing over the next 12 months. Traders remain firm in their belief that aggressive cuts are on the horizon, although recent numbers such as last month's jobs report have been positive and contradict economic conditions that urgently require central bank support. ing.

But forecasts could become less dovish in the coming days if the latest inflation numbers show unexpected upside or if the Fed makes limited progress toward its 2.0% target. In terms of estimates, November's headline CPI is expected to slow slightly to 3.1% from 3.2% y/y, while the core metric is expected to hold steady at 4.0% y/y.

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Receiving data to the United States

sauce: DailyFX Economic Calendar

The December FOMC meeting could provide another impetus for a reassessment of the policy outlook. Officials are expected to leave borrowing costs unchanged at the end of their last meeting of the year on Wednesday, but may be inclined to buck Wall Street's dovish expectations to prevent further easing of financial conditions. do not have.

If the FOMC resists pressure to change course, stands firm, and convincingly commits to keeping interest rates high for an extended period of time, Treasury yields could rise, reversing some of their recent decline. There is a high possibility that This scenario would be very bullish for the USD, paving the way for further recovery into 2024.

With the US economy holding up admirably against all expectations, the sharp easing of financial conditions threatens continued efforts to restore price stability, and the December FOMC meeting The stage seems to be set for a potentially dramatic outcome. Regardless of how things unfold, we can expect increased volatility in the foreign exchange market over the next few days.

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EUR/USD Forecast – Technical Analysis

EUR/USD rallied vigorously last month, but has sold off in recent days and prices have fallen, ending last week below the 200-day moving average. This is a bearish technical event. If the stock price declines further in the coming days, a retest of the 50-day SMA could come at any moment. If the weakness continues, the focus could shift to trendline support near 1.0620.

Conversely, if EUR/USD reverses and rises, technical resistance is seen near 1.0820, but further upside could be expected above this threshold, with the next area to watch at 61.8% is the Fibonacci retracement of 1.0960. It decreased in July and October. If the market continues to perform well, it could retest November's highs.

EUR/USD technical chart

EUR/USD chart created using TradingView

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USD/JPY Forecast – Technical Analysis

Last week, the Japanese yen rose sharply on expectations that the Bank of Japan would soon end its negative interest rate policy, and the USD/JPY pair rebounded from its 200-day simple moving average before falling sharply before recovering somewhat. If the rebound extends over the next few trading sessions, resistance will appear at 146.00, followed by 146.90-147.30.

On the other hand, if the downside momentum resurfaces and causes fresh losses on the pair, the 200-day is likely to be the first line of defense against the bearish attack and subsequent 141.75. USD/JPY may find stability in this region during the decline before heading back. However, if there is a breakdown, the focus will shift to 140.70, followed by trendline support at 139.50.

USD/JPY technical chart

USD/JPY chart created using TradingView

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GBP/USD Forecast – Technical Analysis

GBP/USD has been trending lower over the past few trading sessions after failing to achieve a key upper bound around 1.2720, which corresponds to the 61.8% Fibonacci retracement of the July and October declines. If losses accelerate next week, support will extend from 1.2480 to 1.2455 and the 200-day SMA will converge to the short-term uptrend line. If it falls further, the focus will shift to 1.2340.

Conversely, if the cable manages to recover from its current position, the overhead resistance will be located around the 1.2590 mark. To reignite bullish momentum, this technical barrier must be decisively removed. If this move materializes, it could attract new buyers to the market and create the right conditions for a rally towards 1.2720.

GBP/USD technical chart

GBP/USD chart created using TradingView

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