US DOLLAR FORECAST – EUR/USD, USD/JPY

• U.S. greenback finds stability and rebounds modestly on Monday after a pointy sell-off final week
• The upcoming U.S. inflation report will play a pivotal position in shaping the market’s near-term trajectory.
• This text focuses on the technical outlook for EUR/USD and USD/JPY

Most Learn: US Greenback Forecast – US CPI to Spark Subsequent Huge Transfer – EUR/USD, USD/JPY, GBP/USD

The US greenback discovered its footing on Monday, snapping a dropping streak that dragged the DXY index to its weakest level since January Friday. Earlier than immediately’s modest bounce, the dollar has been dropping floor steadily amid falling U.S. yields on expectations that the FOMC would quickly begin easing.

Final week, Fed Chairman Powell, in an look earlier than Congress, indicated that it’s going to possible be applicable to start dialing again coverage restraint sooner or later this 12 months, noting that policymakers want “only a bit extra proof” that inflation is shifting sustainably in the direction of 2.0% earlier than pulling the set off.

Powell’s feedback, mixed with combined U.S. employment knowledge displaying a slight uptick within the jobless fee in February, bolstered bets that the central financial institution’s first reduce of the cycle will arrive in June, an occasion that bolstered the U.S. foreign money’s downturn.

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Though the outlook for the U.S. greenback has turned extra unfavorable in latest days, merchants shouldn’t completely rule out the potential for a comeback. That stated, one potential catalyst that might set off a bullish turnaround is the upcoming U.S. shopper value index report, due for launch on Tuesday morning.

UPCOMING US CPI DATA

Supply: DailyFX Financial Calendar

Projections point out that February’s headline CPI is poised to remain unchanged at 3.1% year-on-year. Concurrently, the core index, excluding vitality and meals elements, is anticipated to decelerate modestly to three.7% from its prior studying of three.9%.

When it comes to potential outcomes, stronger-than-forecast inflation figures, mirroring January’s upside shock, ought to throw a wrench within the easing narrative, prompting Wall Road to reevaluate the possible timing of fee cuts by the FOMC. Such a state of affairs can be optimistic for the U.S. greenback.

Conversely, if CPI numbers come beneath consensus estimates by a large margin, the market response ought to be the other. This state of affairs would strengthen the idea {that a} downshift in rates of interest is imminent, driving bond yields decrease and boosting the greenback within the course of.

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EUR/USD FORECAST – TECHNICAL ANALYSIS

EUR/USD edged decrease on Monday, retracing in the direction of the 1.0900 deal with. If losses speed up within the coming days, help looms at 1.0890. Under this space, all eyes will likely be on 1.0850, the place a number of shifting averages intersect with a big upward trendline.

Alternatively, if patrons return and re-establish dominance, costs are prone to climb again in the direction of 1.0980. The market’s response at this juncture will likely be essential, as a breakout might pave the way in which for a rally in the direction of 1.1020. Subsequent power would then shift focus to 1.1075.

EUR/USD PRICE ACTION CHART

EUR/USD Chart Created Utilizing TradingView

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USD/JPY FORECAST – TECHNICAL ANALYSIS

USD/JPY prolonged its decline on Monday, falling in the direction of confluence help spanning from 146.50 to 146.00. This vary marks the convergence of a key trendline, the 200-day easy shifting common, and February’s swing low. Extra losses from this level ahead will put deal with the 145.00 stage.

Conversely, if patrons mount a comeback and set off a rebound, resistance is anticipated round 147.50. Past this technical ceiling, the highlight will likely be on 148.90. Advancing additional, market consideration would possibly transition in the direction of 149.70, then onto 150.90.

USD/JPY PRICE ACTION CHART

USD/JPY Chart Created Utilizing TradingView