U.S. Dollar Weakens as Dovish Fed Expectations Mount: EUR/USD, GBP/USD, USD/CAD, USD/JPY Forecasts

Key Takeaways:

EUR/USD moves above 1.1700 after better-than-expected Euro Area Manufacturing PMI.
GBP/USD rises despite weak UK Manufacturing PMI, with potential for further upside.
USD/CAD holds steady, even with strong precious metals rally.
USD/JPY remains range-bound as traders await new catalysts.

U.S. Dollar Faces Pressure Amid Dovish Fed Outlook

The U.S. Dollar Index (DXY) is facing a pullback as market participants turn their focus to a potentially dovish stance from the Federal Reserve. The outlook for Fed policy seems to be leaning towards a more cautious approach, which has placed some downward pressure on the Greenback. Should the DXY settle below the 97.50 level, the next major support zone is expected to be between 97.10 and 97.30.

EUR/USD: Euro Area Manufacturing PMI Fuels Bullish Momentum

EUR/USD strengthened as traders responded to the positive Euro Area Manufacturing PMI, which showed an increase from 49.8 in July to 50.7 in August, surpassing the market forecast of 50.5. This boost in manufacturing activity suggests a resilient economy, allowing the Euro to gain against the USD. The pair is currently attempting to break through resistance at the 1.1685–1.1700 level. A successful move above this zone could push EUR/USD towards the next key resistance at 1.1785–1.1800.

GBP/USD: Despite Weaker PMI, the Pound Remains Strong

GBP/USD has been making moves higher despite disappointing UK Manufacturing PMI data, which showed a decline from 48.0 in July to 47.0 in August, worse than the expected 47.3. However, the GBP is still pushing against resistance at the 1.3550 mark. A break above this level would pave the way for further gains, with the next resistance in sight at 1.3580–1.3600.

USD/CAD: Canadian Dollar Struggles Despite Precious Metals Rally

Despite a rally in precious metals, USD/CAD remains resilient, finding support in the range of 1.3735–1.3750. The pair is attempting to extend its gains, but the Canadian Dollar struggles to capitalize on the strength in commodities. If USD/CAD stays above the 1.3750 mark, it could aim for a test of the 50-day moving average at 1.3821. The RSI is currently in the moderate range, leaving room for potential further upward momentum in the near term.

USD/JPY: Range-Bound as Market Awaits Key Catalysts

USD/JPY has remained stuck below the important resistance zone of 147.50–148.00. The pair needs to close above the 148.00 mark to establish sustained upside momentum. For now, the lack of new developments keeps the pair in a consolidation phase, with traders waiting for additional catalysts or news events to push the pair beyond its current range.

Key Market Drivers to Watch:

U.S. ISM Manufacturing PMI and Labor Market Data later this week.
Euro Area Economic Reports and UK Data continuing to influence currency movements.

Stay updated with Daily Forex Pakistan.

Yasher Rizwan