The US dollar is trying to hold key support into the weekly close. Can bulls do it, and what could it mean for markets as we head into next week’s highly anticipated Fed rate decision?
Watch today’s Weekly Forex Forecast below to see how I’m trading the DXY, EURUSD, GBPUSD, USDCHF, and XAUUSD.
US Dollar Index (DXY) Forecast
The DXY is testing a critical area on Friday between 97.70 and 97.80. It’s a key horizontal level and the bottom of a channel from 2011.
So far, the area is holding as resistance despite Friday’s high reaching 97.89. As mentioned in recent videos, it will take a sustained break above the area on the high time frames to flip it back to support.
I’ll refrain from making any predictions and instead let the market decide what we get next week. A convincing close above 97.80 this week would suggest a bullish dollar for the week ahead. On the other hand, a close below 97.70 keeps the area intact as resistance.
Key levels for the DXY above 97.70/80 include 98.20 and 98.60. Below it, we have 97.30 and the poor lows in the 96.60 region.
EURUSD Forecast
EURUSD rallied last week to test the 1.1750 resistance area. It’s a key pivot from early July, and the bottom of the May channel.
Since reaching this area on Tuesday, the EURUSD price action has been relatively unfavorable. This week’s indecision is mainly due to the DXY’s stalemate in the 97.70 region.
For now, the 1.1750 area is holding as key resistance for EURUSD. Support is 1.1710, followed by 1.1660.
The forex market may become even more unfavorable as we move into next week. Wednesday’s Fed rate decision will be one of the more highly anticipated decisions in recent years, which could lead to choppy price action early next week.
GBPUSD Forecast
GBPUSD also tested a key resistance area last week. I mentioned the 1.3580 region as one to watch in a video last week. Bulls failed to reclaim the level on Wednesday, which triggered the subsequent selloff.
Thursday’s session carved a bearish engulfing candle for GBPUSD. We discussed this in Thursday’s VIP-only video as a factor that could signal a DXY retest of 97.70.
On its own, an engulfing candle doesn’t tell you much, as the next session could invalidate the signal. However, Friday’s candle will likely confirm the bearish signal, which could carry into next week.
That said, where the DXY closes this week, concerning 97.70/80, will be significant for GBPUSD. We also have next week’s Fed rate decision, which will make early-week trading more challenging.
USDCHF Forecast
USDCHF broke down from its July ascending channel last week, opening the door to the 0.7918 support level. The breakdown also confirmed a potential bear flag off the July low.
Overall, USDCHF remains in a bearish trend. That’s especially true when we consider the descending channel from May, as explained in today’s video above.
However, buyers have absorbed the selling pressure well since Tuesday’s drop. The DXY also reclaimed 97.30 on Thursday, forcing me to book a profit on my short, announcements I shared with VIP members in real time. I’ve since reentered the trade with strict invalidation rules for USDCHF and DXY.
Key resistance levels for USDCHF are 0.7970/80, with support at 0.7918 and 0.7872.
XAUUSD (Gold) Forecast
Gold is slipping below its May trend line at $3,336.That’s a must-hold level for XAUUSD bulls, as a sustained break below would open the door to areas like $3,285 and possibly lower.
Although the day isn’t over yet, gold bulls haven’t put up much of a fight since Wednesday’s bearish engulfing candle.
If XAUUSD closes the week below the May trend line, the $3,340 area will flip to resistance next week. If bulls manage a close above the trend line, they’ll have to deal with $3,370, which gold closed just below on Thursday.
One key factor to consider next week is the buy-side imbalance at $3,351. It could become a potential resistance area if gold loses its trendline support.
