The US Dollar experienced a volatile week, initially surging on stronger-than-expected inflation data but then pulling back, forming a bearish engulfing candlestick on the weekly chart. This pattern suggests a potential turn in the Dollar's trajectory, despite high inflation and expectations of further Fed rate hikes by year-end. The 101.80 level in the DXY basket remains a critical support, having previously acted as resistance in June.
EUR/USD saw a sell-off, contributing to the Dollar's overbought condition. However, the pair managed to close the week in the green for the first time since September, hinting at a possible reversal. Key support is now at 1.1200, with resistance in the 1.1275-1.1285 zone.
For USD weakness, GBP/USD appears more promising, with the pair finding support at the 38.2% Fibonacci retracement level of the 2025 rally. Resistance levels to watch are 1.3390, 1.3451, and 1.3500.
Conversely, USD/JPY retains a bullish structure, making it a preferred choice for USD strength. Support levels to monitor are 157.50 and the 156.68-157.22 zone, with a deeper sell-off potentially testing the 155.00 level.