This text focuses on the technical outlook for the U.S. greenback index and a few of the main FX pairs. If you’re desirous about studying concerning the basic prospects for the US foreign money, you should definitely request the complete Q1 forecast.

DXY TECHNICAL ANALYSIS

The U.S. greenback, as measured by the DXY index, trekked upwards and climbed to its greatest stage since November 2022 early within the fourth quarter, however then stalled and unexpectedly pivoted decrease when costs had been unable to decisively overcome confluence resistance close to 107.3. This technical rejection paved the way in which for a protracted sell-off that prolonged into late December, as seen within the chart under, sending the dollar to its weakest level in additional than 4 months.

After current losses, DXY is probing a key assist zone starting from 102.00 to 101.70 – an interval the place a significant long-term rising trendline aligns with the 50% Fibonacci retracement of the Jan 2021/ Sep 2022 advance. Preserving this flooring is important; a failure to take action may amplify downward strain, exposing the 100.75 mark. On additional weak point, the main target shifts to 99.65, then 99.98, the place the 61.8% Fib retracement converges with the 200-week easy transferring common and the July swing lows.

Within the occasion of a bullish reversal from present ranges, preliminary resistance is positioned across the 50-week easy transferring common, however extra features may very well be in retailer for the U.S. greenback on a push above this ceiling, with the subsequent space of curiosity at 104.70. Overcoming this hurdle will pose a formidable problem for the bulls, however a profitable breakout might expose trendline resistance at 105.75. On continued power, a retest of this 12 months’s excessive shouldn’t be dismissed.

US Greenback (DXY) Weekly Chart

Supply: TradingView, Ready by Diego Colman

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EUR/USD TECHNICAL ANALYSIS

After a protracted sell-off throughout a lot of the third quarter, EUR/USD rebounded off trendline assist early within the fourth quarter, rallying previous its 50-week easy transferring common. If bullish momentum is sustained in Q1 2024, which appears an inexpensive proposition, resistance lies at 1.1100/1.1150. Efficiently piloting above this space will expose 1.1275 – a key ceiling the place the 2023 peak aligns with the 61.8% Fib retracement of the 2021/2022 decline. Subsequent features might result in a transfer to 1.1500, adopted by 1.1700.

Conversely, if sentiment shifts in favor of sellers and costs head decrease, the 50-week SMA will function the primary line of protection towards a bearish assault, adopted by confluence assist close to 1.0630, the place a key trendline converges with the 38.2% Fib retracement of the Sep 2022/Jul 2023 climb. Costs might backside out round these ranges on a pullback earlier than staging a comeback, however the possibilities of a descent in the direction of 1.0425 and later 1.0222 will develop within the case of an sudden breakdown.

EUR/USD Weekly Chart

Supply: TradingView, Ready by Diego Colman

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USD/JPY TECHNICAL ANALYSIS

USD/JPY retested its 2022 excessive positioned close to the psychological 152.00 stage within the fourth quarter, however did not breach it, with sellers staunchly defending this technical barrier and finally repelling costs decrease, as seen within the weekly chart under.

Whereas the pair stays in an uptrend, the underlying bias might turn out to be much less constructive if the trade price dips beneath its 50-week easy transferring common at 141.00. In such a state of affairs, costs might gravitate in the direction of 137.50, adopted by 133.20 – a significant Fibonacci threshold. USD/JPY might set up a base on this area on a pullback, however a breakdown might usher a transfer towards trendline assist at 130.00. Trying decrease, consideration turns to 127.33, which represents the 50% retracement of the Jan 2021/Oct 2022 rally.

Shifting our focus to the bullish outlook, if the bears capitulate and consumers reclaim full management of the market, the primary line of protection capping the upside is located at 145.30, with the subsequent subsequent ceiling located at 148.50. Bulls are more likely to encounter staunch resistance on this zone, however a profitable breakthrough might drive costs towards the height noticed in 2023. On additional power, all eyes might be on the 15800 handles.

USD/JPY Weekly Chart

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GBP/USD TECHNICAL ANALYSIS

GBP/USD rallied within the fourth quarter, hitting its greatest ranges since late August and coming near breaking by means of a Fibonacci threshold at 1.2765, denoting the 61.8% retracement of the 2021/2022 selloff (as of late December, this ceiling has not but been breached). Heading into 2024, if cable manages to climb above this barrier, the main target might be on the 200-week easy transferring common, adopted by trendline resistance at 1.2900. On continued power, consumers may very well be empowered to provoke an assault on 1.3145 and 1.3500 thereafter.

On the flip aspect, if the tide turns towards the British pound and the U.S. greenback levels a comeback, GBP/USD may regularly decline in the direction of technical assist at 1.2450, close to the 50-week easy transferring common. Cable might backside out on this area on a pullback earlier than mounting a rebound, but when costs pierce by means of this flooring, a descent towards trendline assist at 1.2340 is conceivable. On persistent weak point, a retest of the October lows may very well be on the horizon, adopted by 1.1800.

GBP/USD Weekly Chart

Supply: TradingView, Ready by Diego Colman