US Dollar Forecast: US PCE to Guide Markets; EUR/USD, GBP/USD, USD/JPY Setups – DailyFX

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

  • The focus of this week’s US economic calendar revolves around the release of the much-awaited economic data for January. PCE Friday data
  • If there is a strong report that exceeds expectations, USD Meanwhile, lackluster results could have a bearish impact on the US currency
  • In this article, we carefully consider the short-term technical outlook for three major FX pairs: euro/usd, USD/JPY and GBP/USD

Most read: Outlook for the Japanese Yen – A turnaround is just around the corner. USD/JPY, GBP/JPY, EUR/JPY settings

Wall Street will be on edge this week ahead of a major event on the U.S. calendar on Friday: the release of core PCE data, the Fed’s preferred measure of inflation. This report can amplify volatility and change sentiment, so traders should prepare for the possibility of wild price movements in order to respond appropriately to sudden changes in market conditions.

Core PCE is expected to rise 0.4% month-on-month in January, resulting in a slight but encouraging directional adjustment for the annualized reading from 2.9% to 2.7%. However, traders should not be caught off guard by the unexpected upside in the official results, reflecting the trends and patterns seen in CPI and PPI surveys a few weeks ago.

Upcoming US data

sauce: DailyFX Economic Calendar

Strong job growth and reaccelerating wages, along with the persistence of price pressures, could prompt the FOMC to delay the start of its easing cycle until later this year, potentially resulting in smaller-than-expected cuts. In this scenario, interest rate expectations could shift to a more hawkish direction compared to the current outlook.

An extended period of rising interest rates could keep U.S. Treasury yields on an upward trend in the near term, establishing fertile ground for USD growth as we prepare for a recovery in 2024. The euro, pound and to a lesser extent the Japanese yen could face difficulties heading into March as the US dollar shows a constructive bias.

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EUR/USD technical analysis

EUR/USD rebounded last week, but was unable to decisively regain its 200-day simple moving average of 1.0825. It is essential to closely track this indicator in the coming days, as a break above this indicator could trigger a rally towards 1.0890. In terms of further strength, attention will be focused on 1.0950.

Alternatively, if the pair is rejected and heads down from its current position, technical support will first appear at 1.0725 and then at 1.0700. Above this threshold, further weakness could prompt a retracement to 1.0650.

EUR/USD technical analysis chart

EUR/USD chart created using TradingView

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every day -12% 12% 1%
weekly -15% 14% 0%

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GBP/USD technical analysis

GBP/USD rose this week but failed to hit the 50-day simple moving average of 1.2680. Overcoming this technical hurdle could pose a difficult challenge for the bulls, but a breakout could lead to a move towards trendline resistance at 1.2725. Once over this barrier, all eyes will be on his 1.2830.

In a scenario where sellers reassert control and initiate a pullback, the first potential support area occurs around the 1.2600 handle. Further losses beyond this milestone could pave the way for a fall towards trendline support and the 200-day simple moving average located at 1.2570.

GBP/USD technical chart

GBP/USD chart created using TradingView

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USD/JPY Forecast – Technical Analysis

USD/JPY further extended its upside this week, coming just short of breaking the resistance at 150.85. Traders will need to closely monitor this technical barrier. A successful breakout could spur buying momentum and accelerate the rally toward last year’s highs around 152.00.

Conversely, if the sellers unexpectedly regain the upper hand and cause a bearish reversal, the first technical floors to look at are at 149.70 and 148.90. Continuing losses above these key support levels could trigger a pullback towards the 100-day simple moving average near 147.50.

USD/JPY technical chart

USD/JPY chart created using TradingView