US Dollar Index
Last week’s economic data showed a rebound in April import prices, while May consumer sentiment remained weak due to growing concerns over President Trump’s trade policies. Recent Fed statements suggested that more data is needed before adjusting policy, particularly to assess how tariffs impact inflation and growth.
Technical Outlook:
The DXY extended its rebound last week, briefly hitting new highs before retreating and forming a long upper shadow — a sign of aggressive selling pressure at higher levels. This week, focus remains on the key 101.85 level:
- Bearish Scenario: If the index trades below 101.85, downside targets include 99 and 97.70.
- Bullish Scenario: A break above 101.85 would open the path toward resistance at 102.80 and 104.36.
EUR/USD
As trade tensions ease, risk appetite returned, lowering the cost of using credit default swaps to insure euro-denominated debt. Market focus this week turns to the ECB meeting minutes.
Technical Outlook:
EUR/USD continued to slide last week and briefly broke below the critical 1.1143 level before closing back above it. This false breakdown suggests strong buying interest at the support zone.
- Bullish Scenario: If EUR/USD holds above 1.1143, a rebound may follow. Watch resistance at 1.1484 and 1.1666.
- Bearish Scenario: A sustained drop below 1.1143 would signal further downside, with support at 1.0940 and 1.0778.
USD/JPY
Japan’s Q1 GDP contracted for the first time in a year and faster than expected, underlining the economy’s vulnerability amid US trade policy risks. This week, markets await Japan’s trade balance report — a key indicator of whether economic weakness will continue.
Technical Outlook:
USD/JPY surged and then dropped back below the key resistance at 146.44 last week. The 146.44 level remains pivotal:
- Bearish Scenario: Continued weakness below 146.44 could lead to declines toward 142.08 and 140.33.
- Bullish Scenario: A strong recovery above 146.44 would put 149.24 and 152.05 in focus as resistance levels.
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Disclaimer
The information provided herein is for informational purposes only and does not constitute an offer or solicitation to buy or sell any financial instruments. Trading Contracts for Difference (CFDs) and foreign exchange (forex) carries a high level of risk and may not be suitable for all investors. It is important to fully understand the risks involved and seek independent financial advice if necessary.
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