The US dollar tested critical resistance on Friday, but can dollar bulls force a reclaim next week, or will the USD weaken once more?
Find out in today’s forecast video and see how I’m trading the DXY, EURUSD, GBPUSD, USDJPY, and AUDUSD next week.
US Dollar Index (DXY) Forecast
The DXY is testing the 102.60 resistance level today, an area and target I’ve discussed for weeks.
It’s the bottom of the 2023 channel that the DXY lost on August 19th.
This is a pivotal area for the US dollar, making it a significant factor for the major currency pairs next week.
As long as the DXY is below 102.60 on the higher time frames, it’s resistance, so buying the USD is ill-advised.
However, a reclaim of this area next week would turn the US dollar bullish toward areas like 103.60 and 104.15.
Key support next week for the DXY is 101.80 to 102.00.
EURUSD Forecast
EURUSD is breaking down today following a dollar-positive non-farm payroll.
I’ve discussed the fakeout above the July channel resistance since August 29th.
Following a prolonged period of sideways action, we’re finally seeing the EURUSD follow through on that failed breakout.
As mentioned earlier in the week, the 1.1110 break opened up the 1.1000 range low.
If EURUSD closes below its 2024 trend line at 1.0985, that area will flip to resistance next week, exposing 1.0950 and 1.0900.
Alternatively, a close above 1.0985 would keep the level intact as support next week with resistance at 1.1000.
GBPUSD Forecast
GBPUSD played out nicely last week following a breakdown from the rising wedge I discussed in last weekend’s forecast.
That trade idea was good for over 200 pips.
As mentioned on Thursday, a GBPUSD weekly close below the 1.3140 area will make things incredibly difficult for bulls next week.
That would confirm a fakeout above the December 2023 channel top, exposing levels like 1.3000 and 1.2890.
On the other hand, a close above 1.3140 would keep the area intact as support with resistance at 1.3250 next week.
USDJPY Forecast
USDJPY has played out nicely for us since the September 25th close above 144.00.
That break targeted the 146.00 imbalance, which we saw on the 27th.
Last weekend, I discussed how USDJPY could range between 141.80 and 144.00 early this week, which we also got.
Going into next week, I would expect the 146.50 area to attract buyers if tested.
However, USDJPY bulls need to remember that the pair remains below its February 2022 trend line at 151.00-152.00.
That will be a critical resistance for USDJPY next week.
AUDUSD Forecast
AUDUSD lost a critical level on Friday at 0.6835.
That’s the January trend line, a level that gave us a short setup back in July on the failed breakout above it.
The Australian dollar also lost the December 2023 high last week following the late September close above.
So, we have two failed breakouts for AUDUSD that could send the pair lower next week.
However, remember that the DXY must clear 102.60 for the US dollar to turn constructive again.
Until that time, I think longing the USD is risky.
