Dollar Tests Triple-Bottom Support at $97.61, Gold Eyes Breakout as Markets Enter New Week

After Friday's stronger-than-expected US Nonfarm Payrolls report failed to spark a sustained dollar rally, traders are heading into the new week with critical technical setups across major currency pairs and gold. The Dollar Index (DXY) is testing pivotal support, XAU/USD is consolidating near multi-month highs, and euro and sterling continue to probe resistance levels within their respective bullish channels.

With central bank policy divergence, ongoing geopolitical uncertainty, and key US cpi" title="Understanding inflation and CPI in forex">inflation data on the horizon, the next few trading sessions could determine whether the dollar breakdown accelerates or finds its footing for a counter-trend bounce.

Dollar Index Tests Triple-Bottom at $97.61 — Breakdown or Bounce?

The Dollar Index (DXY) closed Friday at 98.16, down 0.08%, after briefly dipping to test the critical $97.61 horizontal support zone during the NFP reaction. This marks the third time in recent weeks that DXY has approached this level, forming what technicians call a "triple-bottom" — a formation that can either signal a major reversal or, if broken, accelerate downside momentum.

According to analysis from FXEmpire, DXY remains trapped inside a descending channel that has capped rallies since late April. The index is trading below both the channel midpoint and the 50-period moving average near $98.10, which has acted as dynamic resistance. On the 2-hour chart, price action shows lower highs and bearish wicks, suggesting sellers are defending overhead levels.

Key levels to watch:

• Support: $97.61 (triple-bottom), $97.29, $96.94 (Fibonacci extension targets)
• Resistance: $98.00-$98.10 (moving average + descending trendline), $98.50 (channel upper boundary)

The Relative Strength Index (RSI) sits at 48 with mild negative momentum, indicating neither oversold conditions nor bullish divergence. A clean break below $97.61 would likely trigger stops and open the door to Fibonacci targets near $97.29 and eventually $96.94, while a bounce back above $98.10 could see short-covering toward $98.50.

What's driving dollar weakness? The partial stabilization of the US-Iran ceasefire has reduced demand for the dollar as a safe-haven asset. Tanker traffic through the Strait of Hormuz has resumed, easing energy supply fears. Additionally, softer wage growth in Friday's jobs report (despite the headline beat) has tempered expectations for a more hawkish Federal Reserve under incoming chair Kevin Warsh.

Gold Consolidates Near $4,700 — Bulls Eye $4,734 Resistance Breakout

Gold (XAU/USD) rose to $4,706 on May 8, gaining 0.43% as dollar weakness provided underlying support. However, the yellow metal has struggled to break above the $4,734-$4,713 resistance zone, which technical analysts at LiteFinance identify as the boundary of the current short-term downtrend.

On Thursday, gold tested this resistance but was rejected by sellers, pulling back toward the $4,680 area during Friday's NFP-driven volatility. Despite the setback, inflation concerns, geopolitical risk premium, and a weaker dollar continue to underpin bullish sentiment.

Key levels to watch:

• Resistance: $4,734-$4,713 (trend boundary), $4,968-$4,925 (upper Target Zone if breakout occurs)
• Support: $4,617 (initial support), $4,500 (secondary bearish target)

According to LiteFinance's short-term analysis, if gold settles above the $4,734 resistance and holds, the downtrend will reverse, opening continuation targets toward $4,968-$4,925. Conversely, a rejection and move back below $4,680 could trigger selling toward $4,617, with a deeper correction possible to $4,500 if momentum turns decisively bearish.

What to watch: Traders will be monitoring US inflation data expected next week. A hotter-than-expected CPI print could boost interest rate expectations and pressure gold, while softer data would likely fuel a breakout rally. Additionally, any escalation in Middle East tensions could reignite safe-haven demand.

EUR/USD Defends $1.174, Eyes Breakout Above $1.179

EUR/USD is trading at $1.1771, holding firm above the blue ascending trendline from mid-April lows. The pair has been forming higher lows inside a bullish channel, supported by the 50-period moving average near $1.176 and the $1.174 pivot level, which has served as a critical defense zone.

Friday's price action printed a bullish hammer candlestick at the 38.2% Fibonacci retracement level, signaling buyer control at current levels. However, the RSI remains neutral at 52, indicating consolidation rather than imminent breakout momentum.

Key levels to watch:

• Support: $1.174 (pivot + trendline), $1.170 (deeper channel floor), $1.1687-$1.1670 (trend invalidation zone)
• Resistance: $1.179-$1.183 (swing highs), $1.1849 (secondary target), $1.1853-$1.1842 (Gold Zone)

According to LiteFinance, a clean push and hold above $1.179-$1.183 would open continuation risk toward $1.1849, with a further stretch to $1.1972-$1.1950 (Target Zone 2) if the Gold Zone at $1.1853 breaks. On the downside, a break below $1.1687 would signal a trend reversal, targeting the lower Target Zone at $1.1525-$1.1492.

What's supporting the euro? Recent comments from ECB board member Piero Cipollone have raised expectations for a rate hike by July, with markets pricing in at least two more increases before early 2027. Meanwhile, dollar weakness tied to easing geopolitical tensions continues to favor euro strength.

GBP/USD Holds $1.358 Ascending Channel — $1.365 Breakout in Play

GBP/USD is trading at $1.3614, maintaining its position inside a clean ascending channel from early May lows. The pair briefly tested the $1.3577 Fibonacci level but bounced sharply, with buyers defending the $1.358 dynamic floor provided by the 50-period moving average.

The RSI is holding above 55, indicating steady bullish momentum without overbought conditions or bearish divergences. The white trendline from early May lows continues to act as a reliable floor, while volume profile confirms that $1.36 represents fair value for buyers to defend aggressively.

Key levels to watch:

• Support: $1.358 (dynamic floor), $1.3575 (channel lower boundary), $1.355 (deeper retracement)
• Resistance: $1.3656-$1.3713 (previous rejection zone), $1.375 (psychological level)

A sustained move above $1.3656 would target the $1.3713 swing high, with a potential extension toward the psychological $1.375 level if momentum accelerates. On the downside, a break below $1.3575 would invalidate the bullish channel structure and open the door to retracements toward $1.355 or lower.

What's driving sterling strength? The British pound has benefited from a "risk-on" tone as Middle East tensions ease, alongside a broadly weaker dollar. Sterling tends to outperform in stable global conditions, and with UK economic data holding up reasonably well, the currency has maintained its bullish bias.

Week-Ahead Catalysts: What Traders Are Watching

As markets reopen Monday, several factors could drive volatility across forex and commodity pairs:

• US inflation data: April CPI is expected next week (likely Wednesday, May 13). Consensus forecasts suggest headline inflation could jump to around 3.8% year-over-year from 3.3%, driven by higher gasoline prices. A hotter-than-expected reading could boost the dollar and pressure gold, while a miss would reinforce the dovish Fed narrative.
• PPI and retail sales: Producer Price Index and retail sales data will provide additional insight into the health of the US economy and inflationary pressures.
• Middle East developments: Any breakdown in the fragile US-Iran ceasefire could reignite safe-haven flows into the dollar and gold.
• Central bank commentary: Fed speakers, including incoming chair Kevin Warsh, may provide clues about policy direction. ECB officials will also be in focus after recent hawkish comments from Cipollone.

Technical Summary: Key Levels at a Glance

Dollar Index (DXY): Triple-bottom at $97.61 critical. Break below targets $97.29; bounce above $98.10 eyes $98.50.

Gold (XAU/USD): Resistance at $4,734-$4,713 is the key. Breakout targets $4,968; rejection risks $4,617 or lower.

EUR/USD: Support at $1.174 holds bullish structure. Break above $1.179 opens $1.183-$1.185; below $1.1687 turns bearish.

GBP/USD: Ascending channel floor at $1.358 intact. Above $1.3656 targets $1.3713; below $1.3575 invalidates bullish setup.

Bottom Line

The dollar stands at a crossroads, with triple-bottom support at $97.61 facing intense selling pressure. Meanwhile, gold is consolidating just below a critical resistance zone that could determine the next major leg. EUR/USD and GBP/USD remain in bullish structures, but breakouts require follow-through above key overhead levels.

For traders, the coming week offers high-probability setups in both directions — but patience for confirmation is essential. Watch for decisive breaks of the levels outlined above, and keep a close eye on US inflation data and geopolitical headlines. With volatility likely to remain elevated, stop-loss strategies and disciplined position sizing are more important than ever.