- European PMI data fell below expectations
- US PMI data on the horizon
- DXY vs. EURUSD analysis
Retesting the critical 1.0670 support level mentioned in the previous EURUSD forecast, the EURUSD trend is holding cautiously ahead of the US PMI data, with the daily Relative Strength Index (RSI) (13) hovering near its oversold zone.
Looking at the U.S Dollar Index Chart
EURUSD Forecast: DXY – Daily Time Frame – Logarithmic Scale
The US Dollar Index (DXY) is currently trading near its 3-week highs, with the RSI hovering near its overbought zone. The turnaround from the non-farm payroll results pushed the DXY back into its up-trending territory, with the 105.40 level remaining a significant challenge.
Another fundamental push is needed to further confirm the positive track of the U.S Dollar. Given the potential for a reversal at this point, the lower border of the channel is poised to support any potential drops before invalidating the uptrend again.
Translating the analysis to the EURUSD chart:
EURUSD Forecast: EURUSD – Daily Time Frame – Logarithmic Scale
Previously mentioned targets remained unchanged, as the EURUSD trend has not yet broken below the 1.0660 zone. The price action is hesitant for a further break, and the two scenarios remain in the following manner:
Bearish scenario: a break below the 1.0660 is expected to meet a short-term support near 1.0640 and a longer-term support near 1.06 -1.0590.
Bullish scenario: the reversal from the current 1.0671 low can meet a short-term resistance near 1.0720 and a longer-term resistance near 1.0760 for this week. The break of the EURUSD above the 1.0760 high is needed to confirm the possibility of a bullish reversal.
All eyes are on the weekly close, ahead of a week anticipating Core PCE data. The latest statement from FOMC member Barkin highlighted the need for further data on easing inflation levels before proceeding towards the first rate cut. The upcoming indicator can either fuel or dampen the market’s euphoria accordingly.
--- Written by Razan Hilal, CMT
