The US dollar is rebounding this week, but will the momentum carry into the week ahead?
Get insights into potential market moves and trade setups for the DXY, EURUSD, GBPUSD, AUDUSD, and NZDUSD to help you navigate the week ahead.
US Dollar Index (DXY) Forecast
The USD index is showing signs of life this week with a rebound from the December 2023 low.
Heading into this week, we knew that 100.60 would be a significant test for dollar bears.
Sure enough, we’re seeing a shift in momentum, with the DXY breaking above the 101.13 level mentioned in the last weekly forecast.
Looking ahead to next week, I’m focused on the 102.00 to 102.40 region, provided the DXY holds above 101.13 on a daily closing basis.
This week’s US dollar strength is triggering pullbacks in pairs like EURUSD and GBPUSD, which could intensify if the DXY reclaims 102.40.
However, the 102.00 region will be a crucial test for dollar bulls next week.
EURUSD Forecast
EURUSD is breaking down this week, as discussed in a video a few days ago.
Wednesday’s pullback was the first sign of weakness, especially considering the significance of the 1.1140 level.
Friday’s session is building on Thursday’s close back inside the July ascending channel, which could trigger further losses next week.
However, as mentioned earlier, the DXY 102.00 to 102.40 area is a critical resistance zone for the USD.
With that in mind, we may not see EURUSD unwind entirely unless DXY bulls can reclaim the 102.40 region.
For EURUSD, 1.1100 to 1.1120 will be key resistance next week, with support at 1.1000.
GBPUSD Forecast
GBPUSD is holding up stronger than its euro counterpart, with the 1.3100 to 1.3140 region remaining intact as support.
However, as mentioned in Thursday’s video, the DXY breaking above 101.13 and EURUSD dropping below 1.1100 could spell trouble for the pound next week.
I’m cautious about buying here, knowing that those two markets are signaling potential USD strength.
Instead, I’m watching for a sustained break below 1.3100 next week.
If that occurs while the DXY simultaneously reclaims the 102.40 region, it could create a high-probability short setup on GBPUSD, in my opinion.
AUDUSD Forecast
AUDUSD is struggling at a key resistance area I highlighted to VIP members last week.
The 0.6800 region is a confluence of resistance, based on two ascending trend lines from earlier in the year.
That said, shorting a market with this much bullish momentum can be risky.
However, if we drop to the 4-hour time frame, you can see where AUDUSD is breaking down today.
Check the video above for details.
If AUDUSD closes a day below 0.6746 next week, we could have a confirmed short setup, targeting the 0.6700 area or possibly lower.
NZDUSD Forecast
Knowing that AUDUSD and NZDUSD often move together, it’s no surprise that I’m interested in shorting NZDUSD.
However, NZDUSD first needs to break below 0.6200 on the daily time frame.
This level is critically important!
I won’t short the pair unless we see a sustained break below 0.6200 next week.
A daily close below that level would confirm a fakeout above the range highs and target 0.6050, possibly lower.
Until then, 0.6200 remains key support for the New Zealand dollar.
