Can the US dollar hold key support ahead of this week’s Fed rate decision, and what does it mean for other markets?
In today’s Weekly Forex Forecast, I outline the current ranges and trade ideas for the US Dollar Index (DXY), EURUSD, GBPUSD, NZDUSD, and XAUUSD.
US Dollar Index (DXY) Forecast
The US dollar is testing critical support to start the week, keeping the dollar range-bound.
We saw the DXY test this area in late August, only to bounce back to test the 101.92 range resistance.
For now, the USD Index remains range-bound between 100.60 support and the 102.00 region.
However, the price action so far doesn’t look promising for dollar bulls.
While it isn’t confirmed yet, a sustained break below 100.60 would expose the confluence of support at 99.60.
Time will tell if that materializes, but as always, the DXY is range-bound until proven otherwise.
EURUSD Forecast
The EURUSD played out nicely since the September 6th retest of the 1.1120-1.1140 area.
My first target following that retest was 1.1000, which the euro tested on the 11th.
Since then, we’ve seen an aggressive bounce from the EURUSD to fill the imbalance left behind by the September 6th upper wick.
Whether we see this range continue depends on the DXY catching a bid from 100.60.
GBPUSD Forecast
GBPUSD is another currency pair that reached my first target at 1.3000 following the 1.3100 retest I discussed in last week’s videos.
However, GBPUSD closed last week above the December 2023 ascending diagonal, keeping the area intact as support.
That area comes in at 1.3120 this week.
For that reason alone, I think shorting GBPUSD and even EURUSD is risky, despite the ongoing ranges from these currency pairs.
NZDUSD Forecast
NZDUSD is at a crossroads after closing consecutive weeks below the 0.6200 handle.
However, the pair found support last week at the 0.6140 weekly support level, triggering this week’s retest of 0.6200 as new resistance.
Time will tell if 0.6200 holds, but fakeouts like this on the higher time frames, especially the weekly, often trigger opposing moves.
If that holds up for NZDUSD, we could see a move to the 0.6050 mid-range following this week’s FOMC.
XAUUSD (Gold) Forecast
Gold finally broke free from its range last Thursday, which opened up the $2,580 target area I’ve discussed in recent videos.
That’s the upper parallel from June, which comes in as high as $2,620.
With FOMC coming up, there’s a chance we see XAUUSD test $2,620 before pulling back.
That leaves $2,580-$2,620 as key resistance, with support coming in at the $2,527 range highs.
Any sustained break below $2,527 on the higher time frames would be bearish for gold.
