The forex market is more attractive after the September 17th FOMC, but the devil is in the details.
In Today’s forex forecast, I’m sharing trade setups on the DXY, EURUSD, GBPUSD, USDJPY, NZDUSD, and XAUUSD.
Remember to scroll down after watching the video for additional comments and annotated charts.
US Dollar Index (DXY) Forecast
The DXY followed through on last week’s aggressive bounce from 96.60. That’s the bottom of a 2011 ascending channel I’ve discussed for months.
The September 17th FOMC meeting gave dollar bulls what they needed to defend the 96.60 level. It was a critical moment for the DXY, given the significance of this channel since 2011.
As long as the USD is above that mark on the high time frames, I’ll remain bullish.
Last week, the price managed to push above 97.70, a key benchmark for the price action in October. The level shifts to new support, especially with last week’s close above it.
However, dollar bulls face a critical test next week between 98.60 and 99.00. The 98.60 level has been crucial for the DXY since June, and 99.00 is channel resistance from May.
Some ranging for the DXY between 98.60 and 97.70 seems likely for early next week. Buyers may need to digest last week’s aggressive rally.
If bulls can clear the 99.00 resistance area, resistance levels like 99.35 and the 99.88 imbalance come into play.
Alternatively, a sustained break back below 97.70 would flip the DXY bearish.
I’ll remain bullish on the dollar, given the combination of last week’s close above 97.70 and the 2011 support that held strong in September.
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EURUSD Forecast
EURUSD played out nicely for us last week following Wednesday’s breakdown.
I discussed this in Wednesday’s video, noting that a sustained break below the February trend line would be bearish. It also had the potential to open up lower levels.
Sure enough, Wednesday’s session closed below, and the EURUSD hit resistance on Thursday right at the February trend line.
I also discussed in the VIP Discord group how 1.1645 could serve as support for the euro. That’s a 5-week composite point of control for EURUSD.
In other words, it’s where the EURUSD spent the most time in August and early September. Markets have memories, so areas like these often serve as support or resistance.
So far, euro bulls are defending 1.1645 to the pip. However, I’m not convinced that this bounce will be anything more than a relief rally.
There are two buy-side single prints (imbalances) at 1.1722 and 1.1780. Market makers may target these areas next week, but any retest is likely to be a selling opportunity.
Anticipate more ranging from EURUSD next week. Trading what’s on the chart (trading the range) will always be more profitable than trading what you want to happen.
Lastly, remember we have a poor low (unfinished auction) at 1.15643 and a single print at 1.1440. These could also be targeted, but only if the EURUSD drops below 1.1645 on the high time frames.
GBPUSD Forecast
GBPUSD is another pair that worked out nicely last week. In the previous Weekly Forex Forecast, I mentioned how the break below 1.3580 looked bearish for the pound.
I also discussed how the 1.3529 single print could offer a short opportunity.
Last Tuesday’s session offered the ideal short entry with a high of 1.3537. That retest triggered a fresh wave of sellers, pushing GBPUSD into the 1.3330 support area.
For now, GBPUSD bulls are defending the September low at 1.3330. But like EURUSD, I’m not convinced that this bounce will be anything more than some relief.
Looking at the market profile for the pound, we have two buy-side single prints that could become a factor next week. The first is 1.3410, and the second is 1.3425.
These levels could serve as “magnets” early next week. Unless, of course, we see the pair tag these levels on Friday, since I’m writing this with several hours left in Friday’s session.
Either way, I expect sellers to defend the 1.3425 region if tested early next week.
Looking lower, we have a couple of poor lows. The first is 1.3282 and the second is 1.3254. Whether these become targets depends on whether GBPUSD sellers can break 1.3330 support next week.
If bulls reclaim 1.3380 on Friday, watch for some relief early next week.
USDJPY Forecast
USDJPY broke out last week after nearly two months of sideways chop. I discussed the breakout and a potential trade plan in Thursday’s USDJPY video.
In that video, I mentioned the single prints that could become a factor. USDJPY tagged the 149.51 single print on Friday, but the 148.94 print remains open for business next week.
These levels could serve as key support for USDJPY if we get a pullback next week.
The challenge for bulls is where the DXY is trading. Last week’s retest of 98.60 was a significant moment for the dollar, which is also attracting sellers.
If USDJPY can hold above 148.70, a push higher into 150.23 and potentially 151.20 could be in the cards.
On the other hand, a break below 148.70 would cast a bearish shadow over USDJPY and expose the 147.00 level.
NZDUSD Forecast
A few weeks ago, I included NZDUSD in the forecast, noting that the failure at 0.5890 looked bearish. It confirmed the failed breakout, exposing support at 0.5817 and lower.
Fast forward to today, and NZDUSD has accomplished both of those things.
The pair sold off from the 0.5890 region following the September 18th bearish close, and also broke below 0.5817 support last week.
That keeps sellers in control for next week.
However, like many of the major currency pairs, the New Zealand dollar left several imbalances for next week.
The first single print (imbalance) is 0.5785, and the second is 0.5805. I expect market makers to target 0.5785 early next week; however, targeting 0.5805 will be more challenging.
Either way, I like the idea of looking for shorts next week as long as NZDUSD is below 0.5820. Those two imbalances at 0.5785 and 0.5805 could provide another opportunity to go short.
As for downside targets, we have the bottom of the July descending channel. It’s difficult to say where the level comes in, but my bet is on 0.5660.
There’s a 3-month composite point of control from early 2025 sitting at 0.5660. That’s a fancy way of saying NZDUSD spent a lot of time at 0.5660 in Q1, and markets don’t forget.
XAUUSD (Gold) Forecast
Gold continued its rally last week following the break above $3,700. Pullbacks continue to be shallow with upside seemingly unlimited.
However, XAUUSD is nearing the top of a weekly channel from 2024. I’ve discussed this pattern several times, and the upper boundary currently sits just above $3,800.
It’s not a reason to be bearish by any means. But it is reason enough to approach fresh longs with caution.
Gold has also left several sell-side imbalances in its way. The closest sits at $3,703.
If we get a deeper pullback from XAUUSD in the coming days, $3,703 could become a target.
However, shorting gold remains a losing battle. Even a pullback from $3,800 (if we get it) would likely offer a buying opportunity rather than justification to get short.
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