Today’s weekly forex forecast covers the DXY, EURUSD, GBPUSD, USDJPY, and USDCAD.
It’s a pivotal week for currencies, with the US dollar threatening a breakdown and pairs like GBPUSD reclaiming a potentially significant range last week.
Watch the video and scroll down to view the charts to prepare for the week ahead.
US Dollar Index (DXY)
The DXY sold off aggressively on Friday following non-farm payroll.
The move started at the 105.60 key resistance level, but dollar bulls managed to defend the 104.12 range lows.
So although Friday’s price action looks relatively bearish, the dollar is still range-bound.
That’s a significant consideration for anyone trading the major currency pairs, especially EURUSD.
A daily close below 104.10 would expose 103.50 and 102.60, while a close above 105.60 would open up the 107.80 area.
EURUSD Forecast
Last week, I wrote about a potential EURUSD head and shoulders pattern with a neckline at 1.0540.
We saw the euro test that level on Wednesday but never closed a day below it.
So the head and shoulders never technically confirmed due to the lack of a sub 1.0540 daily close.
Instead, the EURUSD rallied aggressively following Friday’s NFP but encountered sellers at the 1.0690 range highs.
So much like the DXY above, the EURUSD is range bound until one of these levels cracks.
A daily close above 1.0690 would expose 1.0760, while a close below the 1.0540 neckline opens up 1.0230.
GBPUSD Forecast
GBPUSD carved out a potentially significant reclaim on Friday, closing the day and week back above 1.1915.
That’s been the range low for GBPUSD since November.
However, the pound remains very sideways, and this reclaim occurred on a Friday, which I never fully trust.
Additionally, as mentioned above, the DXY is range bound, so some caution is needed here.
If GBPUSD can get above this short-term trend line and the DXY closes below 104.10, then we could get that move back to 1.2445 range resistance.
Alternatively, a daily close back below 1.1915 would be relatively bearish for GBPUSD.
USDJPY Forecast
USDJPY barely managed to stay above 134.40 on Friday.
That’s a must-hold level for bulls, as a daily close below it would confirm a bearish reversal toward 132.90 and potentially 130.70.
But although USDJPY managed to stay above 134.40 last week, it did close below 135.38.
As you can see from the chart below, that was resistance on February 23rd and later flipped to support during the recent range.
So a bearish rejection from 135.38 next week would signal additional weakness, especially if USDJPY closes a day below 134.40.
Alternatively, bulls must secure a daily close back above 135.38 and 137.90 to extend the rally.
USDCAD Forecast
USDCAD is approaching a massive resistance at 1.3880.
The level dates back to April 2020 and has held as resistance on a daily closing basis since then.
As such, I expect some weakness from USDCAD starting at or just above 1.3880.
The pair must close a day above that to expose higher levels like 1.4265.
But bearish price action from 1.3880 this week could take USDCAD back to 1.3700, which is key support after last week’s breakout.
This is another case where monitoring this pair and the DXY will help you navigate the forex market in the week ahead.
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2023-03-11 15:00:00Z
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