Will we finally get some follow through from the US dollar, and how might it affect the EURUSD, GBPUSD, and USDJPY?

Get the latest in today’s Weekly Forex Forecast.

US Dollar Index (DXY) Forecast

The DXY broke down last week after retesting the September trend line near 109.50 on February 3.

Some follow-through is a welcome sight, even if it wasn’t the move I expected.

Thursday’s session closed below a key trend line from the November 22 high, which is now resistance near 107.20.

Next week, I’ll be watching the 106.00 support area closely, given its significance on the quarterly time frame since January 2023.

This area could extend to 105.70, with the October 2023 trend line support just below at 105.00.

Despite last week’s breakdown, I expect market conditions to stay relatively tight, given the current level of uncertainty.

EURUSD Forecast

EURUSD staged a comeback last week after gapping down on Monday.

It started with a daily close above 1.0350 and gained momentum with Thursday’s break above 1.0457.

The pair faces resistance next week at 1.0533, with a break there opening the door to 1.0615.

One thing to note about the recent EURUSD downtrend is that we never saw a backtest of the 1.0660 region following the November breakdown.

There are several key levels in that area, along with a fair value gap at 1.0687 that could come into play later this month.

Key support next week is between 1.0440 and 1.0457.

GBPUSD Forecast

GBPUSD tested key resistance at 1.2617 on Friday, a pivot from the December 2 low.

This followed Thursday’s breakout above the 1.2500 resistance level.

While we could see some consolidation early next week, a sustained break above 1.2617 would expose the 1.2800 highs.

Like EURUSD, there’s an untested area on the GBPUSD chart at 1.2850.

That level marked a significant breakdown in November and could act as a magnet later this month.

Key support next week is 1.2500.

USDJPY Forecast

USDJPY had a volatile week, nearly round-tripping its rally from 151.36 to 154.80.

Despite the pullback between Thursday and Friday, the pair could find a local bottom early next week if it carves out a higher low.

An ascending channel has developed, with support at 151.20 next week.

Additionally, the Japanese yen looks subdued following last week’s breakout, so a USDJPY bottom may depend on whether the US dollar finds support next week.

This isn’t a trade I want to rush into, but I’ll be watching for a potential higher low around 152.00.