Will the US dollar break free from consolidation next week or continue in a sideways range?
Watch today’s Forex forecast to see the key levels and setups for DXY, EURUSD, GBPUSD, USDJPY, and XAUUSD.
US Dollar Index (DXY) Forecast
The DXY continues to be a difficult market to read.
On Tuesday, the USD index closed below the 100.60 key support, only to reclaim it by Wednesday’s close.
Typically, this would suggest a local bottom and a move toward the range highs.
However, the DXY is once again losing the 100.60 support today, potentially exposing the confluence of support at 99.60 next week.
This creates a difficult market to read, making it even tougher to trade.
If the DXY loses 100.60 this week, it could open up 99.60 support heading into October.
On the flip side, a weekly close above 100.50/60 would keep the support level intact and could push the DXY toward the 102.00 range highs.
EURUSD Forecast
EURUSD has been a challenging market to trade, to say the least.
Since late August, the price action has not only been sideways but also incredibly choppy and indecisive.
While the euro remains above the 1.1110 mid-range I’ve mentioned recently, it has yet to break above the July channel resistance.
Until EURUSD breaks one of these levels, traders should expect continued choppy price action.
That said, I believe the DXY offers a clearer outlook on key levels to watch for next week.
GBPUSD Forecast
GBPUSD has been much stronger compared to EURUSD.
However, the pair is struggling to break above the ascending trend line from May and is currently just below the 1.3450 to 1.3500 key resistance area.
That said, I wouldn’t consider shorting GBPUSD, given the uptrend since May.
The only way GBPUSD becomes a favorable short is if it sustains a break below 1.3240.
Until then, buyers remain in control.
USDJPY Forecast
A few days ago, I mentioned that USDJPY was bullish toward 146.00 to 146.50.
I wasn’t wrong, despite Friday’s massive 430-pip drop.
Notice how Wednesday’s session closed above 144.00, Thursday’s session retested it, and Friday’s candle reached a high of 146.49.
However, predicting next week’s price action is more challenging.
Friday’s close below 144.00 turns the level back into resistance, but USDJPY shorts should be cautious while the pair remains above 141.80 on the daily time frame.
XAUUSD (Gold) Forecast
Gold has had an impressive run since June, especially after breaking above $2,527.
That breakout targeted the $2,600 channel resistance I’ve mentioned on this site and later went on to break that level as well.
However, I’m always cautious of upward breaks of ascending levels, as they often result in failed moves.
That said, XAUUSD is still above $2,590, so shorting here wouldn’t be advisable.
If gold breaks below $2,590 on the higher time frames, it could open up $2,527 as new support.
Alternatively, bullish price action from the $2,590 to $2,600 region next week could trigger the next leg higher for XAUUSD.
