Weekly Forex Forecast (February 6-10 2023)
The DXY, EURUSD, GBPUSD, USDJPY, and USDCAD are all covered in today's weekly Forex forecast
Last week, the dollar reversed higher, and a few major currency pairs broke significant levels, making this week crucial for February
Forecast for the US Dollar Index (DXY)
On Friday, the USD index (DXY) rose after reclaiming 101.50.
Dollar bulls, on the other hand, will have their work cut out for them next week with 103.50, a confluence of resistance based on the key horizontal and channel resistance.
A daily close above 103.50 would open the door to 105.60, pushing EURUSD and GBPUSD lower.
Alternatively, a daily close below 102.60 would indicate that Friday's move was a sham and would maintain the recent DXY range.
On Thursday and Friday, the EURUSD broke through several key support levels.
Following Thursday's close, I mentioned to members of the Discord group that EURUSD could reverse.
Friday, however, retested that 1.0925 level and sold off significantly.
Nonetheless, the euro is approaching key support levels of 1.0780 and 1.0700.
So we could see a bounce from one of those areas early this week, followed by a retest of the 1.0850 regions as new resistance.
However, last week's EURUSD candle indicates weakness and a possible retest of 1.0700 next week.
I stated that a daily close below 1.2240 would confirm the breakdown, and the session closed at 1.2224 on Thursday.
So it's no surprise that GBPUSD fell on Friday, though I doubt anyone expected a 175-pip drop.
GBPUSD bears will most likely defend 1.2110 this week.
However, if tested, the recent range lows at 1.1900 should attract significant demand.
On Friday, the USDJPY closed above 130.60, a level I've mentioned several times in recent videos.
The first 24 to 48 hours of next week should reveal whether Friday's breakout is sustainable.
If this is the case, a rally toward the 134.50 resistance level appears likely.
However, if the USDJPY closes Monday or Tuesday below 130.60, especially 129.40, it would indicate further weakness.
But, for the time being, last week confirmed a USDJPY bullish breakout.
USDCAD has bounced right off the 1.3300 support level that I recently discussed.
That is the July 2021 trend line, which has been critical support since September 2022.
As long as USDCAD remains above 1.3350, I expect the pair to rise toward the October trend line at 1.3560.
And, as I mentioned in today's video, I think the bulls will defend 1.3350 to 1.3370 this week.