US Dollar Forecast: Caution as Core PCE and Unemployment Data Loom – Gold, GBP/USD and EUR/USD Outlook

Gold Holds Steady Amid Weakening Dollar and Rising Yields

The U.S. dollar softened following mixed economic data, giving a modest lift to gold prices. Although ADP Non-Farm Employment data exceeded expectations with 233,000 jobs added, the broader economic picture showed slower GDP growth at 2.8% and lower-than-forecast price indices.

The weaker dollar has provided some support for gold, even as rising Treasury yields create headwinds.

Investors are closely watching upcoming Core PCE and unemployment figures, which could influence the Fed’s rate outlook. With market sentiment cautious ahead of these key releases, gold may continue to see limited gains if the dollar remains under pressure.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading slightly down at 104.039, facing some bearish pressure just below the pivot at $104.224. The 50-day EMA at $104.192 is acting as a resistance point, nudging the index lower and indicating that sellers may still have the upper hand.

If DXY remains below this pivot, the next support levels to watch are $103.934 and $103.814, which could stabilize any downward moves.

However, if the index breaks above $104.224, it might shift the tone bullish, with potential to test $104.433 and even $104.594, assuming momentum strengthens.

Gold – Technical Analysis

Gold (XAU/USD) is trading near $2,784, down 0.09%, and faces critical resistance at $2,790.22 due to a double-top pattern. Support from the 50-day EMA at $2,762.90 suggests bullish potential.

A break above $2,790.22 could drive prices toward $2,803.33, while slipping below $2,772.47 may lead to further declines, targeting $2,760.49.

GBP Outlook as Bond Auction and MPC Speech Loom

The British pound (GBP) faces volatility as the market anticipates key events, including the 30-year bond auction and remarks from MPC member Breeden.

The bond auction, with a forecast yield of 4.33%, could impact investor sentiment towards UK debt.

Meanwhile, Breeden’s comments may offer insights into the Bank of England’s future policy moves.

 GBP/USD Technical Analysis

GBP/USD is trading around $1.29630, edging up by 0.02%, and holding just above the pivot point at $1.29425. This level is key as it supports a potential bullish reversal, especially with an upward trendline lending additional strength here.

The 50-day EMA at $1.29756 and 200-day EMA at $1.29874 suggest the next resistance is close, which could challenge upward momentum. If the pair can clear $1.29665, further targets at $1.29809 and $1.29928 come into play.

However, slipping below $1.29425 might shift the tone bearish, with support likely to emerge at $1.29324 and $1.29192.

EUR Weakens Amid Mixed Economic Data from Germany and Italy

Germany’s preliminary CPI increased by 0.4%, surpassing expectations, while unemployment figures rose to 27K, signaling a softer labor market. Italy’s GDP growth stagnated at 0.0%, missing the anticipated 0.2% increase.

Market participants are now eyeing the European Central Bank’s Economic Bulletin for further insights on Eurozone economic health.

Upcoming inflation and unemployment data will be pivotal in shaping market sentiment on EUR’s short-term trajectory.

EUR/USD Technical Forecast

EUR/USD is trading around $1.08509, slightly down by 0.04%, as it hovers above the pivot point at $1.08420, which is now acting as a key support. This level, previously a resistance, suggests the pair may maintain a bullish stance if it holds.

The 50-day EMA at $1.08347 and the 200-day EMA at $1.08306 add further support in this area.

Immediate resistance sits at $1.08580, and a break above could target $1.08714 and $1.08853. However, a slip below $1.08420 might open the door to sharper declines, with support down at $1.08288 and $1.08112.