The US dollar is sitting on a confluence of support that extends over a decade. It’s a must-see level that could affect the entire forex market in the weeks ahead.
Watch today’s video for all of the details, including how I’m trading the DXY, EURUSD, GBPUSD, USDJPY, and XAUUSD.
US Dollar Index (DXY) Forecast
The DXY broke down last week, finally offering a thorough retest of 97.70. In previous videos, I’ve discussed how the index didn’t quite test the level in April, which left it open as a potential target.
Buyers stepped in on Friday to close the intraweek gap at 98.58. The DXY retreated after the gap closed but remains above 97.70 as we enter next week.
Another critical factor for the US dollar is the ascending channel from 2011. Although it’s difficult to pinpoint the exact placement on the daily time frame, the 14-year channel support is near 97.70.
That makes the next few weeks critical for the DXY. We either get a significant macro bottom developing in the 97.70 region, or the USD is heading much lower this year.
As always, it’s essential not to get ahead of ourselves. Until the DXY can break its 2025 trend line resistance or break below its 97.70 support, the US dollar will remain range-bound.
EURUSD Forecast
EURUSD broke above key resistance at 1.1530 on Thursday, flipping the level to new support during Friday’s session.
As we’d expect, bulls stepped in to defend the area before the weekend. However, EURUSD faces its most significant test in weeks as the DXY bounces from the 97.70 region.
With that said, a EURUSD bearish reversal can only take place if the pair closes back below the 1.1530 region. It will also need to occur on higher time frames, such as the daily and weekly charts.
Keep in mind that the March trend line at 1.1440 is also incredibly significant. The euro bounced from this level several times in May and June, so it’s one to watch.
Key resistance is 1.1660, with 1.1530 as support. As mentioned above, if EURUSD loses the 1.1530 support level, it will open up downside targets, including 1.1440, and potentially lower.
GBPUSD Forecast
GBPUSD refuses to back down from 1.3630 despite showing a nearly identical pattern to the 2024 top.
As discussed in recent videos, the current (potential) rising wedge resembles the 2024 price action before GBPUSD topped out. The RSI is also showing early signs of bearish divergence.
Simultaneously, the DXY is testing the confluence of support I shared above.
But despite these bearish factors, GBPUSD hasn’t confirmed a breakdown. For that to occur, areas like 1.3530 will need to break, along with the more significant 1.3430 support level.
Until then, GBPUSD is range-bound between 1.3430 support and 1.3630 resistance.
USDJPY Forecast
I touched on USDJPY in last week’s forecast. And although the pair hasn’t done much to confirm my ideal setup, it also hasn’t invalidated it.
My ideal scenario for USDJPY starts with the Yen Basket we discussed last time. Currently, the chart is holding above its 2020 trend line support, but a weekly close below could introduce significant yen weakness.
At the same time, USDJPY has to claw its way back above 145.40 on the high time frames. If the two charts satisfy these requirements simultaneously, we should have a highly probable USDJPY long to work with.
Until then, I’m not interested in USDJPY, given the choppiness since May.
XAUUSD (Gold) Forecast
Gold broke out from a bull flag on June 2nd and tested prior resistance as new support on the 9th. That retest triggered last week’s rally, which fell just short of breaking the $3,430 resistance area.
If gold bulls can break $3,430 next week, the next stop could be an all-time high above $3,500. XAUUSD is clearly benefiting from the multitude of global risks and uncertainties.
Above $3,500 it’s anyone’s guess, as gold will once again enter price discovery. However, as $3,500 became a factor, I’d be willing to bet that $4,000 would become a target and potential resistance if visited.
