The forex market is bracing for more trade announcements and today’s FOMC minutes.
However, the overall structure looks promising for opportunities in the coming days.
Watch today’s Forex Mid-Week Review to see exactly how I’m trading the DXY, EURUSD, GBPUSD, and XAUUSD.
US Dollar Index (DXY) Forecast
The US dollar is testing a critical resistance area this week at 97.70. That’s the bottom of a 2011 channel that failed in June.
Although the dollar has strengthened so far in July, its gains will be short-lived unless bulls can break the 97.70 region. A break would also need to occur on the high time frames, especially the weekly chart.
There’s no shortage of DXY buy-side imbalances to target if bulls break 97.70.
There are multiple single prints above 100.00, even above the 105.00 handle.
However, it’s imperative to respect the chart as it stands. You could have one hundred imbalances above the current price, but they’re meaningless as targets without a technical trigger, or in this case, a sustained break above 97.70.
Key support levels for the DXY are 97.40 and 97.10. Resistance areas include 97.70 and 98.40.
EURUSD Forecast
EURUSD continues to slide lower in July following an exceedingly bullish close in June. This pullback is something I alluded to at the start of the month.
The euro was testing the top of its May channel in early July, indicating potential weakness. Furthermore, we had sell-side imbalances that could drag the euro lower.
One imbalance remains at 1.1638, but the challenge for euro bears is the DXY holding below 97.70. That will make a EURUSD retest of 1.1638 much more difficult.
For now, the EURUSD remains range-bound. Key support levels are 1.1685 and 1.1630. Resistance is 1.1750 and 1.1788.
I shorted EURUSD last week and booked half the profit this week. It was a nice intraday swing trade, but I’m not a big fan of trading the pair at the moment, given the indecision and potential for sudden volatility.
GBPUSD Forecast
GBPUSD is trading below the 1.3630 area I mentioned recently. That’s the location of a trend line from the 2023 high.
What’s interesting about that trend line is that it connects with the 2024 high. We also have several GBPUSD highs from late May and June that retested the trend line as resistance.
The fact that GBPUSD broke above this area and recently failed could indicate lower rates. However, the DXY testing 97.70 resistance is once again the wildcard here.
Until we get a resolution to the DXY’s current predicament, trading pairs like EURUSD and GBPUSD will remain challenging.
Key resistance for GBPUSD is 1.3630, with key support at 1.3415. There are also two sell-side imbalances, one at 1.3509 and the second at 1.3452.
XAUUSD (Gold) Forecast
Gold continues to trade below its 2025 trend line on a weekly closing basis. I referenced this a couple of weeks ago as something that could introduce weakness in the short term.
XAUUSD remains within the confines of its short-term descending channel. The metal tested support on Tuesday, and we have a buy-side imbalance at $3,317 that buyers may target on Wednesday.
As mentioned in Tuesday’s video, $3,322 is key resistance and a six-day composite value area low, making it one to watch if retested.
It’s unclear if we’ll see XAUUSD test its June lows near $3,250. The price action in the $3,322 area (if tested), as well as the DXY in its current range, will determine the outcome.