US DOLLAR FORECAST – EUR/USD, USD/JPY, GBP/USD
- The U.S. greenback sinks to its lowest stage since July, with the DXY index closing the week at 101.70
- No main occasions are anticipated within the week forward, however that doesn’t imply that volatility might be low, as skinny liquidity situations might amplify market strikes
- This text zooms in on the technical outlook for EUR/USD, USD/JPY, and GBP/USD, analyzing important worth thresholds to observe within the closing buying and selling classes of 2023
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Most Learn: US Greenback in Freefall Heading into 2024. What Now for EUR/USD, GBP/USD, Gold?
The U.S. greenback, as measured by the DXY index, dropped for the second consecutive week, closing at its lowest stage since late July (101.70) in a low-volume atmosphere forward of the Christmas festivities and the ultimate buying and selling days of 2023.
Taking latest losses into consideration, the DXY index has fallen by about 4.21% within the fourth quarter and by roughly 1.75% in December, pressured by the numerous pullback in authorities bond yields, which have corrected sharply decrease from their cycle’s highs established in late October.
The Fed’s pivot has strengthened ongoing market tendencies, exacerbating the downward shift within the Treasury curve and the buck’s retreat. To elaborate, the FOMC adopted a dovish place at its final assembly, admitting that it had begun talks of price cuts and signaling 75 foundation factors of easing in 2024.
The next chart exhibits the magnitude of the shift within the Treasury curve during the last two months or so.
US TREASURY CURVE DOWNWARD SHIFT
Supply: TradingView
Looking forward to the final week of 2023, there aren’t any impactful releases on the calendar which may considerably alter present tendencies. This might outcome within the consolidation of latest strikes, particularly the weakening of the U.S. greenback and falling yields. However, the absence of high-impact occasions on the calendar doesn’t assure low volatility and regular markets.
Diminished liquidity situations, attribute of the vacation interval, can typically amplify worth swings, as seemingly routine or moderate-sized trades can upset the fragile steadiness between provide and demand, with few merchants on their desks to soak up purchase and promote orders. Subsequently, warning is strongly suggested.
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EUR/USD TECHNICAL ANALYSIS
Following latest positive aspects, the EUR/USD now confronts a pivotal resistance zone between 1.1000 and 1.1025. If this ceiling is taken out decisively within the coming days, we might see a rally in direction of 1.1085. On additional power, the main target shifts to 1.1140, which corresponds to the higher restrict of a rising channel in play since September.
On the flip aspect, if patrons’ efforts to drive costs larger fail and in the end lead to a downturn off present ranges, preliminary assist turns into seen at 1.0830, close to the 200-day easy transferring common. The pair is prone to backside out on this space earlier than resuming its advance, however within the occasion of a breakdown, a droop in direction of 1.0770 may very well be within the playing cards.
EUR/USD TECHNICAL CHART
EUR/USD Chart Created Utilizing TradingView
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USD/JPY TECHNICAL ANALYSIS
USD/JPY ticked up on Friday however didn’t reclaim its 200-day easy transferring common. If the pair stays beneath this indicator within the coming days, promoting strain might begin constructing momentum, setting the stage for an eventual decline in direction of the December lows at 140.95. This flooring have to be protected in any respect prices; failure to take action might spark a retracement in direction of trendline assist at 139.50.
Conversely, if patrons regain the higher hand and propel USD/JPY above its 200-day SMA, resistance seems at 144.80. Surmounting this impediment will show difficult for the bullish camp, however a profitable breakout might create the fitting situations for an ascent towards the 146.00 deal with. A continued show of power might embolden the bulls to intention for 147.20.
USD/JPY TECHNICAL CHART
USD/JPY Chart Created Utilizing TradingView
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| Change in | Longs | Shorts | OI |
| Each day | -11% | 5% | -3% |
| Weekly | -4% | -1% | -3% |
GBP/USD TECHNICAL ANALYSIS
GBP/USD inched up heading into the weekend however hit a roadblock at cluster resistance stretching from 1.2727 to1.2769, the place an important Fibonacci stage converges with a downtrend line prolonged from the 2023 peak. Reinforcing bullish momentum requires clearing this technical hurdle; with a profitable breakout probably paving the way in which for a transfer in direction of 1.2800, adopted by 1.3000.
Alternatively, if sellers stage a comeback and provoke a bearish reversal, trendline assist is situated across the 1.2600 space. This dynamic flooring might supply stability throughout a pullback, however a push beneath it might usher in a retest of the 200-day easy transferring common hovering barely above the 1.2500 deal with. Additional weak point might redirect consideration to 1.2455.
GBP/USD TECHNICAL CHART
GBP/USD Chart Created Utilizing TradingView
