The US dollar bounced from its 2011 channel support last week during FOMC. Can buyers clear 97.70, and if so, what does it mean for the rest of the forex market?
Watch today’s video to see how I’m trading the DXY, EURUSD, GBPUSD, NZDUSD, and XAUUSD.
US Dollar Index (DXY) Forecast
The US dollar bounced from 96.60 last week. That’s the 2011 channel support I’ve been pointing out since July.
The Fed’s latest rate decision gave that bounce more fuel, as buyers stepped in quickly.
Now the wall is at 97.70. That level has capped the dollar since August.
A weekly close above 97.70 would confirm strength and open the door to 98.60.
If sellers defend 97.70, the market stays in a range for next week.
However, as long as the USD holds above 96.60 support on the weekly chart, I’ll remain cautiously bullish on the dollar.
DXY takeaways:
- Key support = 96.60
- Key resistance = 97.70 and 98.60
- Weekly close above 97.70 = 98.40
- Sustained break below 96.60 = bearish territory
Join us in the VIP Discord group for real-time updates on GBPUSD and other markets, which includes VIP-only videos, my trades in real time, and the complete trading course.
EURUSD Forecast
EURUSD played out perfectly last week. The pair swept the 1.1908 resistance level, as I mentioned it might last week.
The rejection from the 1.1900 region was spot on. That’s a confluence of resistance dating back years.
Now the focus shifts to the February trend line near 1.1730. So far, it’s holding as support.
However, last week’s sustained break below the 1.1800 area presents a challenge for EURUSD bulls.
Buyers will have to take 1.1800 to keep the rally intact. For now, it’s resistance.
If EURUSD breaks below the 1.1730 region, it will expose targets such as 1.1564 and possibly 1.1440.
The first is a poor low from early August, the second a single print from August 1st.
Those could become targets for EURUSD, but only on a sustained break below the 1.1730 area.
EURUSD Takeaways:
- Key support = 1.1730
- Key resistance = 1.1800
- Sustained break below 1.1730 = 1.1580
- Sustained break above 1.1810 = 1.1900
GBPUSD Forecast
GBPUSD tagged the 1.3700 single prints perfectly last week. I’ve made several blog posts and videos since August about these levels.
Single prints like the ones in the 1.3700 region often serve as targets, or “magnets”, for a market.
The highest single print we discussed was 1.3730. Wednesday’s high was 1.3727.
Since Wednesday’s Fed fade, GBPUSD has broken below 1.3540. That’s a pivotal point for the pound, as the sustained break below opens the door to some well-defined targets.
The first is the poor low at 1.3484. GBPUSD tagged that level on Friday.
There’s another poor low at 1.3418 that could become a target next week.
However, I want to stress the DXY here.
For pairs like EURUSD and GBPUSD to move even lower, the DXY needs to take out 97.70 on a weekly closing basis.
Until that time, trade the ranges.
GBPUSD Takeaways:
- Key support = 1.3480
- Key resistance = 1.3540
- Sustained break below 1.3480 = 1.3380
- Sustained break above 1.3580 = 1.3680
Join us in the VIP Discord group for real-time updates on GBPUSD and other markets, which includes VIP-only videos, my trades in real time, and the complete trading course.
NZDUSD Forecast
NZDUSD is signaling potential US dollar strength next week.
I wrote about this descending channel a few weeks ago. Since then, the New Zealand dollar has broken resistance and taken out the 0.6000 high.
However, last week’s FOMC fade put NZDUSD in hot water.
The pair closed Thursday’s session back inside the channel, confirming a buy-side fakeout.
A fakeout, which stands for “failed breakout”, usually triggers a move in the opposite direction.
For NZDUSD, that could mean a move lower in the coming weeks as long as 0.5880 resistance holds.
The 0.5800 is key support for the NZD. However, there’s a single print from April at 0.5600 that could become a target later this year.
Of course, the DXY will have to reclaim 97.70 for NZDUSD to push as low as 0.5600. That said, we can’t rule it out.
NZDUSD Takeaways:
- Key support = 0.5818
- Key resistance = 0.5880
- Sustained break below 0.5810 = 0.5600
- Sustained break above 0.5880 = 0.6000
XAUUSD (Gold) Forecast
Gold spent last week consolidating, which isn’t surprising given the aggressiveness of September’s breakout.
In last weekend’s forecast, I mentioned the $3,700 resistance level. Round numbers like this often serve as support or resistance, and XAUUSD was no exception.
However, we’ve yet to see a deep pullback from gold.
Even the single prints at $3,600 and $3,563 remain intact, and I’m not sure that will change next week.
As mentioned last week, this rally isn’t one you want to fade. Watching for buys on pullbacks is the best way to play this.
The question is, where do you buy?
I would have liked to see $3,600 for a buying opportunity. But Friday’s rally makes me think we might not get it.
So the same rules apply: Buying on dips makes the most sense, but mind the $3,700 resistance area.
XAUUSD Takeaways:
- Key support = $3,600
- Key resistance = $3,700
- Sustained break below $3,600 = $3,563
- Sustained break above $3,700 = $3,800
Join us in the VIP Discord group for real-time updates on GBPUSD and other markets, which includes VIP-only videos, my trades in real time, and the complete trading course.
