Welcome to your Weekly Forecast for the trading week beginning 27th January 2025! With significant market movements brewing, this week promises a dynamic trading environment. Here's everything you need to know about the key instruments in focus:
The US Dollar Index (DXY)
The DXY remains the centre of attention, particularly with the Trump administration announcing plans to keep a tighter leash on the Federal Reserve. This hints at potential interest rate stagnation, which could weaken the dollar. On the weekly chart, a bullish pattern is holding strong, although momentum is clearly slowing, with 114 remaining a long-term target based on Fibonacci extensions. On the daily chart, bearish divergence is evident, and support levels between 104.36 and 104.76 are critical. A short-term pullback towards 108.5–109.5 is possible, which presents an excellent opportunity to sell. While short-term corrections are expected, the long-term bullish momentum for the dollar remains intact.
GBPUSD
GBPUSD appears ready to rise as the dollar weakens, leveraging strong support levels to regain momentum. On the weekly chart, buyers have returned, with bullish divergence confirmed, and the pair looks set to target 1.2791 (50% retracement) and 1.2952. On the daily chart, bullish momentum is dominating, and any pullback around 1.2386–1.2461 could offer a prime buying opportunity. With buyers in control across all timeframes, capitalising on dips to ride the upside remains a promising strategy for GBPUSD in the coming week.
USDCHF
Meanwhile, USDCHF is showing clear signs of exhaustion at resistance levels, allowing the Swiss Franc to benefit from dollar weakness. On the daily chart, a bearish divergence signals that sellers are regaining control, and resistance near 0.9065 could hold back further gains. On the 4-hour chart, the lower highs and lower lows confirm that the pair is in a downtrend, with a break below 0.8982 potentially pushing the price towards 0.8840. For USDCHF, minor pullbacks provide an opportunity to sell, as the overall outlook appears bearish.
EURGBP
This pair has reached a key resistance zone, and momentum is beginning to show signs of exhaustion on shorter time frames. On the weekly chart, while longer-term bullish momentum persists, a retracement appears likely in the short term. Key resistance levels to watch are between 0.8742 and 0.8805. On the 4-hour chart, bearish divergence suggests sellers are stepping in, with a pullback towards the 0.8540–0.8470 range presenting a potential target. While the short-term outlook is bearish, the longer-term bullish potential for EURGBP remains intact.
Gold (XAUUSD)
Finally, Gold (XAUUSD) remains a trader’s favourite, with bullish potential dominating despite the likelihood of temporary pullbacks. On the weekly chart, the bullish trend remains intact, with targets set at 2843, 2990, and the psychological level of 3000. On the daily chart, temporary pullbacks are expected as the dollar strengthens, but dips near 2735–2683 should be seen as prime buying opportunities. On the 4-hour chart, the bullish trend is unchallenged, though minor pullbacks can be used to re-enter long positions. Overall, Gold remains poised for a strong upside, and buying dips during corrections continues to be the best approach.
This week will also bring key events likely to impact the markets, including monetary policy updates from the US Federal Reserve, European Central Bank, and Bank of Canada. These announcements could significantly influence price action in instruments such as the US Dollar Index, Gold, and EURGBP.
We hope this analysis aligns with your trading strategy for the week. Let’s capitalise on these insights to make this week a profitable one! Stay disciplined and trade wisely.
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