Weekly Forex Forecast (May 29-June 2, 2023)

Today I’m going to show you exactly how I’m trading the dollar, EURUSD, GBPUSD, USDCAD, and XAUUSD next week.

We’ve had some incredible moves from pairs like EURUSD and USDCAD recently, so I’ll show you what I’m watching now.

I’ll also share some super clean technicals on GBPUSD and XAUUSD.

Let’s dive in!

US Dollar Index (DXY) Forecast

The dollar has been on a tear recently, gaining an impressive 3% since May 10th.

For those who followed me through April, you know I was relatively bullish on the DXY while above 100.80.

You’ll also remember how 104.20 was and still is a key level for the dollar.

That’s where DXY bulls ran into some problems on Friday, closing the week just below 104.20.

So for the week ahead, the dollar’s direction will come down to whether we get a sustained break above 104.20 or if the 4-hour trend line below fails.

If it fails, the 103.50 yearly open should serve as critical support.

And if dollar bulls force a sustained break above 104.20, the next stop is the 105.00 handle.

I’ll remain bullish on the DXY while above 103.50 on a daily closing basis, as a break below that would suggest a deeper pullback.

EURUSD Forecast

The EURUSD has played out beautifully since the May 11th breakdown.

I mentioned the larger ascending channel several times leading up to the breakdown, and also wrote about the bearish potential on May 11th.

Since then, EURUSD is down 250 pips as of Friday’s close.

Where the euro goes this week depends on 1.0700 support and the smaller descending channel below.

A sustained break below 1.0700 opens up the 1.0600 support area, while a higher time frame close above 1.0760 would signal relief toward 1.0830.

GBPUSD Forecast

GBPUSD finally gave us a bearish reversal from the 1.2660 level I mentioned previously.

That led to a close below 1.2370 on Friday, which flips to resistance next week.

However, expect some buying pressure at 1.2290 if tested, with a sustained break below that opening up 1.2185.

With that in mind, the best way to trade GBPUSD next week is level to level.

In other words, play the ranges as you see them and respect support as support and resistance as resistance.

USDCAD Forecast

USDCAD hit both our targets last week, the first being 1.3550 and the second being 1.3650.

I mentioned this bullish trade setup on May 22nd.

We saw USDCAD encounter some selling pressure at 1.3650 on Friday, which was expected, given the significance of the area.

For the week ahead, I’ll watch to see if we get a pullback to the 1.3540-1.3550 demand area.

That could offer a favorable long opportunity provided the DXY stays constructive.

Alternatively, a sustained break above 1.3650 opens up the March 2020 trend line at 1.3800.

Gold (XAUUSD) Forecast

I’ve written about a potential gold breakdown several times in recent weeks, with the March 21st trend line being the trigger for a short.

XAUUSD closed below that trend line on May 16th.

Gold has since closed below $1,960, which served as support for a few days but failed on Thursday.

Friday retested the level as new resistance, so that will be one to watch next week, as any sustained break above opens up $1,980.

We also have a trend line from early November to keep an eye on near $1,935.

That’s a massive support for bulls as a failure there opens up levels like $1,920, $1,885, and potentially lower.