US dollar outlook – EUR/USD, GBP/USD, USD/JPY
- of USD It fell sharply last week, weighed down by falling U.S. bond yields.
- However, future US policy could turn the tide in favor of the dollar. consumer price index Data exceeds estimates
- US inflation data for February will be released on Tuesday morning
Most read: USD/JPY falls on speculation that the Bank of Japan will soon end negative interest rates, focusing on US inflation
The U.S. dollar plunged last week, weighed down by falling U.S. Treasury yields on rising expectations that the Federal Reserve will soon start cutting borrowing costs for the U.S. economy. After many twists and turns, by the end of the week, the DXY index had plunged 1.10%, marking its best weekly performance since early December.
US dollar index and US bond yields
sauce: TradingView
Fed Chairman Jerome Powell said the central bank is not yet fully confident that consumer prices are on a sustained trajectory toward convergence to the 2.0% rate cut target, but that policymakers He suggested that it is “not long” before investors gain more confidence in policy rates. The inflation outlook will finally trigger.
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Chairman Powell’s remarks to Congress, coupled with mixed U.S. jobs data that revealed the unemployment rate unexpectedly rose to 3.9% in February, suggest the Fed will implement its first interest rate cut of the business cycle in June. The probability has increased by 57 times, increasing the view that it is possible. Friday’s percentage was up from 52% two days ago. The graph below shows the current probability of a Fed meeting.
Source: CME Group
Looking ahead, USD bears have regained the upper hand, but the tide could change in the coming days. For example, if February US inflation data released on Tuesday were to significantly beat consensus expectations and reflect January’s upside surprise, the mood could change quickly and bulls could try to make a comeback.
The following table provides a summary of Wall Street CPI forecasts as of Friday.
Upcoming US inflation report
sauce: DailyFX Economic Calendar
A CPI number showing minimal progress in eliminating inflation should be bullish for the USD as it could trigger a hawkish repricing of the Fed’s roadmap. In such a scenario, investors would expect the Fed to keep interest rates high for a longer period of time, which would mean a delay in easing monetary policy.
On the other hand, if the inflation report is more subdued than consensus expectations, it should be bearish for the dollar. This would confirm Wall Street’s dovish outlook and lead to an extension of the recent slide in yields. Given the potential market impact of the upcoming CPI survey, traders should follow its announcement closely and pay particular attention to trends in core indicators.
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EUR/USD Forecast – Technical Analysis
EUR/USD has risen sharply in recent days, breaking through several important thresholds during the rally. If the rally gains momentum over the next week, an important ceiling to watch will emerge at 1.0980, followed by 1.1020. Any subsequent strength will focus on trendline resistance at 1.1075.
Conversely, if sellers make an unexpected pullback and drive the price lower, the first technical floor to watch is at 1.0890. If further losses occur above this, all eyes will be on the subsequent confluence support at 1.0850 and 1.0790.
EUR/USD price action chart
EUR/USD chart created using TradingView
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USD/JPY Forecast – Technical Analysis
USD/JPY fell sharply this week, dropping below 147.50 and closing at its lowest level since early February. If losses continue in the upcoming trading sessions, the first support will appear at 146.50. Below this level, all eyes will be on the 200-day simple moving average, which is just above the 146.00 mark.
On the other hand, if the USD bulls can trigger a rebound, we can expect resistance near 147.50. Once that threshold is crossed, 148.90 becomes the center of attention. Looking further to the upside, market attention could shift to 149.70 and then 150.90.
USD/JPY price action chart
USD/JPY chart created using TradingView
How retail positioning GBP/USDDirectional bias? Our sentiment guide contains valuable insights into market sentiment as a trend indicator. Download now!
|
change |
long |
shorts |
OI |
| every day | -7% | 3% | -1% |
| weekly | -twenty five% | 42% | 11% |
GBP/USD Forecast – Technical Analysis
GBP/USD has soared this week, breaking through major resistance around 1.2830 just before the weekend. If this bullish breakout persists over the next few days, buyers may gain the courage to launch an attack on the psychological 1.3000 level. Above this point, additional upside puts 1.3140 in sight.
Conversely, if the sentiment suddenly becomes bearish and the price starts to fall, support lies at 1.2830 and then at 1.2715. A further decline will bring attention to the 50-day simple moving average, which is hovering around 1.2675.
