Technical Report: Markets Remain Under Pressure from a Stronger US Dollar
Markets are currently moving under clear pressure from the strength of the US dollar, after it received support from the latest labor market data, particularly the decline in weekly jobless claims. This gave the impression that the US economy remains resilient despite elevated interest rates. This environment is making investors more cautious when dealing with major currencies and gold, as keeping US interest rates at levels higher than those of other economies gives the dollar a relative advantage. The latest Federal Reserve meeting, the first under the leadership of Kevin Warsh, confirmed that markets are not only watching the interest rate decision, but also monitoring the potential change in the way monetary policy is managed. Although interest rates were kept unchanged within the 3.50%–3.75% range, Warsh’s more cautious tone kept the dollar supported, especially amid ongoing concerns over inflation and the strength of the US labor market.
EURUSD
The EUR/USD pair is facing clear pressure as the interest rate differential continues to widen in favor of the United States. US interest rates remain higher than those in the eurozone, and this gap makes the dollar more attractive to investors, especially if the market continues to price in the Federal Reserve maintaining a hawkish stance for longer. Technically, the pair is trading near the 1.1600 area, which represents a middle zone within a sideways range that has a bearish bias. As long as the price remains below the 1.1680–1.1700 area, selling pressure is likely to remain in place, potentially pushing the pair toward 1.1550 and then 1.1500. A clear break below 1.1500 could increase downside pressure and open the way toward 1.1450 and then 1.1400. However, if the pair manages to move back above 1.1700 and hold above it, we may see a rebound toward 1.1750 and then 1.1800. But this scenario would require a clear weakening of the dollar or a shift in US interest rate expectations, rather than just a short-term corrective move. Overall, EUR/USD remains under pressure, but the move so far is not a collapse. The pair is trading within a sideways range with a bearish tilt, and a clearer directional signal will likely come from either a break below 1.1500 or a move above 1.1700.
GBPUSD
GBP/USD is moving within a wide range between the key support near 1.3000 and the important resistance near 1.3750. Although the pair has not yet entered a clear downtrend, its position in the lower half of this range reflects weak upside momentum, especially as the US dollar remains strong. The current pressure is mainly coming from the US dollar side, but UK data cannot be ignored. Inflation, wage growth, and Bank of England decisions will remain important factors in determining the direction of the pound. Therefore, it would be wrong to build the outlook on the Federal Reserve alone, as any unexpected improvement in UK data could ease pressure on the pair. Technically, as long as the price remains below the 1.3450–1.3500 area, the bias remains closer to a gradual move lower within the range. A break below 1.3200 could increase selling pressure and push the pair to retest 1.3000. This area is very important, because a break below it could shift the move from a sideways range into a clearer downtrend, with a potential target near 1.2750. On the other hand, a break above 1.3500 and holding above it could open the door for an attempt to rise toward 1.3600 and then 1.3750. Until that happens, selling into rallies remains more reasonable than chasing buying at elevated levels. In summary, GBP/USD is still moving within a large range, but it remains tilted toward weakness as long as it stays below 1.3500. The 1.3000 level remains the most important dividing line in the coming phase.
XAUUSD
Gold is facing clear pressure as the US dollar rises, because a stronger dollar makes the yellow metal more expensive for holders of other currencies. At the same time, keeping US interest rates at elevated levels reduces the appeal of gold, as it is a non-yielding asset compared with bonds and dollar-denominated instruments. However, gold’s outlook is not linked to the dollar alone. The decline in oil prices following the easing of tensions around the Strait of Hormuz has reduced part of the geopolitical concerns, which in turn weakened demand for gold as a safe-haven asset. On the other hand, if lower oil prices help ease inflation expectations, the market may later start pricing in a less restrictive monetary policy stance, which could offer some support to gold. Technically, gold is moving within a short-term descending channel after failing to hold the previous peak near the $5,500 area. As long as the price remains below the $4,900–$5,000 area, corrective pressure is likely to remain in place, and the downside move could extend toward $4,100 and then $4,000 if the dollar continues to rise. A move back above $5,000, however, could partially change the technical picture, as it would signal a breakout from the descending channel and a recovery of some positive momentum. In that case, gold could return to test $5,200 and then $5,500. But before such a breakout occurs, rebounds are more likely to be corrective moves within a short-term downtrend. In summary, gold is facing dual pressure from the strength of the US dollar and weaker demand for safe-haven assets. However, the downside may become limited if the market starts pricing in slower inflation and lower chances of further monetary tightening later on.
General Outlook
The overall market picture still favors the US dollar. The strength of the labor market gives the Federal Reserve more room to maintain a restrictive monetary policy stance, while the decline in oil prices has helped calm some inflation concerns, but has not been enough to fully change the market direction. Therefore, major currencies are likely to remain under pressure as long as the dollar maintains its momentum, while gold remains within a corrective wave as long as it fails to break above the key resistance areas. However, this view should be treated with flexibility, as any sharp decline in US inflation data or a clear shift in the Federal Reserve’s tone could quickly change the market direction.
Important Disclaimer
This report does not constitute a direct buy or sell recommendation, nor does it represent binding investment advice. Financial markets are highly risky, and prices may move against expectations due to unexpected news, economic data, or changes in liquidity. Every trader should manage capital carefully, use stop-loss orders, and avoid entering any trade before reviewing their own analysis and making sure the level of risk is suitable for their account size.
