What’s next for the US dollar after an incredible rally and a retest of 104.50 resistance?
Find out how I’m trading the DXY, EURUSD, GBPUSD, USDJPY, and USDCAD in today’s forex forecast video.
US Dollar Index (DXY) Forecast
The DXY is finally pulling back this week after reaching my 104.00 to 104.50 target that I set following the 102.60 reclaim.
It’s been an incredible rally from the US dollar, and one that I don’t think is over just yet.
The reclaim of 102.60 was significant and most likely means a bullish USD through the end of the year.
However, the DXY isn’t immune to pullbacks, as we saw on Thursday.
I remain bullish on the DXY while above 102.60 with support coming in at 103.20.
As I’ve mentioned for the last few weeks, shorting the US dollar is risky business, given the aggressiveness of the October rally and the 102.60 reclaim.
EURUSD Forecast
EURUSD reached my final target on Wednesday following multiple breakdowns, including 1.1110 and 1.1000.
In a recent video, I discussed how traders should anticipate a bounce from the 1.0760 area, which we certainly got on Thursday.
However, 1.0840 resistance is holding firm today, so there’s no reason to long the EURUSD, in my opinion.
If euro bulls can take out 1.0840 on a daily closing basis, it will expose 1.0900.
Until then, expect ranging between 1.0840 and 1.0780.
GBPUSD Forecast
GBPUSD also reached my target this week at 1.2900.
If you saw my recent videos on the pound, you know I was looking for shorts on the 1.3050 retest with a 1.2900 target.
The 1.2900 region is key support for GBPUSD, but was also an imbalance from August 16th.
Imbalances like that tend to serve as magnets, and 1.2900 was no exception.
From here, it comes down to whether the DXY pulls back from the 104.00 region.
While US dollar pullbacks will happen, I’m hesitant to get bullish on pairs like GBPUSD while below key resistance such as 1.3050.
USDJPY Forecast
USDJPY is getting interesting, with a potential reclaim of the 151.00 to 152.00 region.
I just told VIP members a few days ago to watch for a possible reclaim here.
I wasn’t interesting in shorting USDJPY from the 152.00 region for the same reason I haven’t wanted to short the US dollar this month (see DXY comments above).
If USDJPY can hold convincingly above the 151.00-152.00 area going into the weekend, it will expose levels like 155.60 next week.
However, a convincing close is required to flip this area to support.
Until then, caution is needed.
USDCAD Forecast
USDCAD is approaching a massive resistance area at 1.3900.
In fact, it extends as high as 1.3950, and dates back to 2020.
It will take a sustained break, preferably on the weekly time frame, above the 1.3900-1.3950 region
Until then, USDCAD is trading below a critical resistance area.
Although we could see another pullback, I expect the eventual (bullish) breakout here to be explosive considering the last two years of consolidation.