The US dollar held steady this morning as investors awaited the release of a series of critical economic indicators. Retail and core retail sales are expected to increase by just 0.1%. They are predicted to be the most essential indicators of the US’ financial health.
Industrial production is forecast to experience an increase of 0.3% rise, and unemployment claims are predicted to decrease just a bit to 241K from the prior 258K.
The Philly Fed Manufacturing Index is expected to show a slight improvement, rising by a few points to 4.2 from 1.7. As of now, gold is continuing its climb, averaging $2,681, and further gains are likely if economic data disappoint, which could lead to expectations for rate cuts.
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US Dollar Index (DXY) – Technical Outlook
The Dollar Index (DXY) maintains its bullish outlook, trading at $103.610 and registering an increase of 0.06%.
While it is above the pivot value of $103.503, The DXY faces immediate resistance at $103.698, which could lead to additional gains towards $103.820 and $103.953. On the other hand, the support levels are $103.382, which is followed by $103.190 or $103.031.
Technical indicators strongly support $50.27, the 50-day EMA of $103.227. The 200-day EMA of $102.370 aligns with the overall positive trend.
A dip below $103.503 could lead to a drastic decline in the index’s performance. The current market conditions favor a further upward movement.
Gold Performance and Analysis
The price of gold (XAU/USD) has increased by 0.31%, trading at $2,681.69, and is sustaining its momentum over the pivot point at $2,666.86.
Suppose gold breaks the threshold of $2,685.60 and targets $2,697.75 or $2,710.54. The support level remains at $2,653.29. The 50-day EMA is $2,660.61, and the 200-day EMA at $2,637.79 confirms the bullish outlook for gold.
Investors are observing US economic data because a lower-than-expected growth rate could spur the demand for gold, pushing prices up.
Sterling Drops Following UK Inflation Miss
The British currency is under tension after inflation data failed to meet expectations. The UK Consumer Price Index (CPI)was reported as 1.7%, which is a little short of the predicted 1.9%, and the base CPI was also disappointing at 3.2%.
These numbers and a greater-than-expected decline in the Producer Price Index (PPI) Input of 1.0% have fueled concerns about the Bank of England’s (BoE) approach to monetary policy.
The GBP/USD pair continues to fall, trading at $1.29784, and bearish sentiment dominates after dropping below a symmetrical triangle.
The pair is hovering under the pivot point of $1.30158 and has immediate support at $1.29614. If the pair falls below these levels, it could push GBP/USD further down as additional support is $1.29397 or $1.29188.
A range of resistance between $1.30376 and $1.30626 can limit upward corrections, and the 50-day EMA serves as a major resistance level at $1.30377. Currently, the currency is in flux due to worries about the BoE’s upcoming move.
Euro Awaits ECB Decision Amid Economic Data
The euro is the focus as traders anticipate the European Central Bank’s (ECB) interest rate decision. The critical inflation indicators include the Core CPI Final at 2.7% and the final CPI of 1.8%, which aligned with expectations.
There was a positive change in the eurozone trade balance, which grew to €17.8B. Italy’s trade surplus, however, was below forecasts at €5.55B.
It is expected that the ECB expects to keep its refinancing rates at 3.40%. All eyes will be focused on ECB president Christine Lagarde’s press event to get clues regarding the bank’s next policy on monetary policy.
Investors will be particularly attentive to remarks regarding the Eurozone’s low inflation rates.
The EUR/USD pair trades around $1.08540 in the red, down 0.08%, with more negative pressures threatening. The pair is still below the pivot point of $1.08629 with resistance levels of $1.08354 and $1.08033.
If these support levels are held, there could be some stabilization; however, a lower break could increase losses. The current resistance is $1.08803, while higher levels are between $1.08976 and $1.09159.
The technical outlook remains negative, with the 50-day EMA at $1.08961, a sign of the negative sentiment surrounding the pair. A rise above $1.08629 might provide some relief, but the sellers now have the upper hand.
Euro Price Performance This Week
The euro has been struggling against other currencies over the past week. This is compared to the US dollar, which has recorded a 0.79% decline.
This is a sign of broader worries regarding the outlook for the Eurozone’s economy and is exacerbated by weaker inflation numbers along with mixed economic data.
The euro’s fall against the US dollar demonstrates its vulnerability to global economic uncertainty. Future movements will be heavily influenced by the results of the ECB’s decisions.
As the week unfolds, investors will follow closely for developments to determine the next moves that could be coming in the forex market.
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Disclaimer – The views and analysis presented in this article are solely those of SMJ (Stock Market Journal) and should not be considered as financial advice. Forex trading involves significant risk, and you should carefully consider your investment objectives, level of experience, and risk appetite before engaging in such activities. Past performance is not indicative of future results. Always seek professional financial advice before making any investment decisions.