US Dollar Forecast: Bears Mobilizing for Their Next Offensive? – EUR/USD,...

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The U.S. dollar, arsenic measured by the DXY index, was a tad softer connected Monday successful a discourse of mixed U.S. Treasury yields and thinner liquidity successful the FX space, with UK markets closed for a slope holiday. Despite this, the dollar's diminution wasn't azygous – it weakened against large currencies similar the euro and the pound but strengthened against the yen.

FX MARKET PERFORMANCE

Source: TradingView

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Taking Monday’s fluctuations into consideration, the DXY scale is down much than 1.4% from its April highs, though it has rebounded somewhat from its caller trough established past Friday. Nevertheless, bulls person been intelligibly connected the antiaircraft implicit the past fewer trading sessions, notably pursuing the Federal Reserve's dovish presumption astatine its past argumentation gathering and disappointing U.S. employment data.

The Fed's volition to easiness contempt renewed inflation concerns, which was the takeaway from past week's FOMC meeting, coupled with weaker-than-anticipated occupation instauration successful April, has triggered a crisp pullback successful enslaved yields successful May, emboldening caller rate cut bets for the twelvemonth aft they were sharply reduced precocious past month. This concatenation of events has go a large headwind for the U.S. currency.

Looking ahead, the U.S. economical calendar shows a deficiency of large impactful events successful the upcoming days. This could let the ongoing inclination successful forex to consolidate for immoderate time. However, the near-term outlook would request to beryllium revised astir mid-May, erstwhile the adjacent acceptable of U.S. CPI figures is due. This study volition connection caller insights into the existent inflationary landscape, important for informing the Fed’s aboriginal decisions.

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EUR/USD FORECAST - TECHNICAL ANALYSIS

EUR/USD moved up connected Monday and made its mode towards the 1.0800 handle, coming wrong striking region from taking retired some its 50-day and 200-day elemental moving averages. Bears indispensable guarantee that prices stay nether these method indicators to stall the bullish momentum; immoderate lapse mightiness trigger a rally towards trendline absorption astatine 1.0830, followed by 1.0865, a cardinal Fibonacci barrier.

In the lawsuit of a bearish turnaround from existent levels, traders should intimately ticker 1.0750 and 1.0725 arsenic captious enactment areas. Below these thresholds, the absorption volition displacement to 1.0695, followed by 1.0645. A retest of the second portion could spot the brace stabilize earlier mounting a comeback again. However, if a breakdown occurs, the anticipation of a diminution towards the 1.0600 people cannot beryllium ruled out.

EUR/USD PRICE ACTION CHART

EUR/USD Chart Created Using TradingView

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GBP/USD FORECAST - TECHNICAL ANALYSIS

GBP/USD besides precocious connected Monday, recapturing its 200-day elemental moving mean and steadily approaching confluence absorption betwixt 1.0610 and 1.0630 – an country that marks a convergence of the 50-day SMA with 2 important trendlines. Buyers whitethorn find it challenging to breach this method hurdle; however, a bullish breakout could spur a determination towards 1.2720.

Alternatively, if the bears rouse from their slumber and steer prices beneath the 200-day SMA, enactment extends from 1.2515 to 1.2500. Cable needs to clasp supra this level to forestall selling unit from intensifying; nonaccomplishment to bash truthful could make the close conditions for a plunge towards 1.2430. On further weakness, each eyes volition beryllium connected the intelligence 1.2300 level.