Weekly Forex Forecast (June 19-23, 2023) DXY, EURUSD, GBPUSD, AUDUSD, USDCHF

Welcome to This Week’s Forex Forecast

In this week’s Forex forecast, we will be discussing the DXY, Euro, Pound, Australian Dollar, and the US Dollar versus the Swiss Franc. We will analyze the recent price action and provide insights into potential market movements for the week ending June 23rd, 2023.

DXY (US Dollar Index)

The US Dollar Index (DXY) experienced a significant pullback last week following the release of CPI and FOMC data. This pullback was more aggressive than anticipated, breaking below the 103 level. Currently, the DXY is testing a crucial support area at around 102.20.

This support area is significant as it represents the last opportunity for dollar bulls to carve a higher low. If the DXY breaks below this level, it could indicate a series of equal lows and lower highs, suggesting a bearish scenario for the dollar. Therefore, the 102.20 area is crucial to watch in the coming weeks.

Euro (EUR/USD)

The Euro caught many traders off guard with a strong move last week. It broke above the resistance level at 108.30, which was expected to act as a stop loss run before a rotation lower. However, the Euro surpassed this level and also broke above 109.30, a significant monthly resistance level.

Currently, the Euro is trading between two critical levels: 109.30 and 109.70. A sustained break above 109.70 could indicate a move back inside the range and potentially test the year-to-date low. On the other hand, a break below 109.30 could lead to a rotation lower towards 108.20.

Given the extent of last week’s rally, a pullback to flush out late longs is likely before any further upward movement. However, it is essential to monitor the upcoming event risks, such as CPI and BoE rate decision, which could impact the Euro’s direction.

Pound (GBP/USD)

The British Pound broke above a significant resistance area at 127.40 last week, which marked the top of a pattern and a key horizontal level. However, there are critical event risks for the Pound this week, including CPI and BoE rate decision.

To assess the Pound’s direction, it is crucial to monitor whether it can stay above 127.40 in the coming days. This level will be critical on higher time frames. A sustained hold above this level could lead to a move towards 130 and potentially 131.70. However, a close back below 127.40 could indicate a move towards the trend line support.

Considering the recent rally, a pullback to flush out late longs is expected before any further upward movement. Traders should exercise caution due to the upcoming event risks.

Australian Dollar (AUD/USD)

The Australian Dollar experienced a significant breakout from a key support area at 65.80, followed by a rally above 67.80. However, the rally has become extended, and a pullback to flush out late longs is expected.

To assess the Australian Dollar’s direction, it is crucial to monitor whether it can hold above 68.70 on higher time frames. A close back below this level could indicate a minor fakeout, leading to a retest of support around 67.80. On the other hand, a sustained hold above 68.70 could lead to a move towards 70 and potentially 71.

Traders should exercise caution and wait for a pullback before considering long positions. The market’s reaction to the upcoming event risks should also be closely monitored.

US Dollar vs. Swiss Franc (USD/CHF)

The US Dollar vs. Swiss Franc pair presents a different perspective compared to the overall weakness of the dollar. The recent breakout from a falling wedge and subsequent retest suggests a bullish outlook.

However, it is crucial to wait for confirmation before considering long positions. The market needs to close back inside the channel it lost, indicating strength. Alternatively, a close below the trend line support could indicate a failed breakout and a move towards lower support levels.

Traders should exercise caution and wait for a higher time frame confirmation before entering any positions. The market’s indecision regarding the dollar’s direction should also be taken into account.

Frequently Asked Questions (FAQs)

Q: What is the DXY?

The DXY, or the US Dollar Index, is a measure of the value of the US dollar relative to a basket of foreign currencies. It provides a benchmark for the dollar’s overall strength or weakness.

Q: What are the critical levels to watch for the Euro?

The Euro has two critical levels to watch: 109.30 and 109.70. A sustained break above 109.70 could indicate a move back inside the range, while a break below 109.30 could lead to a rotation lower.

Q: What are the event risks for the Pound this week?

The Pound faces critical event risks this week, including CPI and BoE rate decision. These events could impact the Pound’s direction and should be closely monitored.

Q: What is the outlook for the Australian Dollar?

The Australian Dollar is expected to experience a pullback to flush out late longs before any further upward movement. Traders should exercise caution and wait for a pullback before considering long positions.

Q: What is the outlook for the US Dollar vs. Swiss Franc pair?

The US Dollar vs. Swiss Franc pair presents a different perspective compared to the overall weakness of the dollar. Traders should wait for confirmation before considering long positions and closely monitor the market’s reaction to determine the pair’s direction.