US Dollar Forecasting: Euro and Sterling Undervalued; Divergent Eurozone PMIs Create Concerns for the USD pairs.

Key Points & Considerations

The US DXY falls amid a high ISM Service PMI, reflecting conflicting reactions in the markets.

Eurozone economic information highlights differences; Germany’s trade position excels, whilst the French service industry lags.

Coming up feature FOMC Member Mester’s opinion, as well as major EU and United Kingdom PMI announcements.  That may have an influence on the exchange rate.

US dollar Muted Response to Solid ISM Services the purchasing manager data

Following Asia period, the DXY moved marginally lower, retracing to $104.280, or 0.17 per cent drop. The result arose amid the issuance of a strong ISM Service PMI of 53.4, Having above the originally predicted 52.0 & the prior 50.6 mark. The robust PMI suggests the service industry remains robust.

Event Summary & Evaluation

The European economic report varied. Revealing the German Trading Flow topping forecasts at 22.2 billion compared to an anticipated 19.0 billion. Showing a large trading surpluses.

PMIs for the services industry differed among key Eurozone economies. While Italy and Spain posting results that beyond forecasts, indicating services resiliency.

In contrast, the French service industry underperformed, with a headline PMI of 45.4. The European confidence in investors and PPI m to m statistics additionally disclosed persistent economic concerns. Especially signs of deflation seen in both the PPI readings.

The Upcoming Activities

Important upcoming developments for the US currency  includes FOMC Member Mester’s address at the Ohio Banking League Economic conference. Which is scheduled to take place followed by audience queries.

On the Eurozone face, the focus will remain on German Manufacturer Orders with The retail sector sales. Amid forecasts leading to a reduction in purchases with a dip in sales at the retail level. That might affect EURUSD movements.

The pound sterling market is scheduled to announce its Building PMI, amid expectations showing a slight rise. That may impact GBPUSD movements.

US dollar & DXY – Technical Analysis

Source: TradingView

The DXY is at a crucial crossroads, with its pivoting factor fixed at 104.607. In this 4-hourly graph evaluation.  Main barriers are identified at 104.853, 105.110, then 105.346 marks. All signifying important limits for possible price gains.

Nearby support is seen around 104.211, which represents a 23.6 percent Fib retrace. Additional support is visible at 103.959 (Fib regression) & 103.761 (50 percent Fibonacci retrace). Which are critical for preventing the price index from falling deeper. The technical picture gets more marked by the 50 D-EMA around 103.678 area. Considering these features, the DXY is trending negative under $104.607. Showing a wary view for the dollar’s value in the immediate run.

The EURUSD Technical Perspective

The EURUSD duo rises slightly, traded at 1.07563, gaining 0.13 percent. Over the 4-hourly rate graph structure. Aan important time is seen as it hangs near the turning point, which is near 1.07545 level.

Particularly, the levels of resistance at 1.07646 (23.6 percent Fib retrace), – 1.07891 (38.2 percent Fib regression). Then 1.08097 (50 percent Fib recession) indicate probable hurdles to higher advance. On the opposite side, supports are seen around 1.07115 mark, next to 1.06934 & 1.06732 mark. Which are significant areas wherein purchasing activity may arise.

The 50 d-EMA stands at 1.08191, while the 200 D- EMA is around 1.08732 level. Showing a potential bull mood over the pivotal value of 1.07545 area.

5- Hourly Technical Indicators & Signals