U.S. Dollar Moves Away From Highs As Jobless Claims Rise: Analysis For EUR/USD, GBP/USD

Market Overview

During Friday’s Asian session, the US Dollar Index (DXY) edged up to near $99.48, reflecting a cautious market mood. Despite the uptick, the dollar faces pressure from lingering trade and fiscal uncertainties.

Investors are holding back ahead of critical US economic data and Federal Reserve signals on rate policy.

Rising Jobless Claims Add Pressure on USD

The latest US Jobless Claims report showed new claims rising to 240,000 for the week ending May 24, surpassing forecasts of 230,000 and up from the previous week’s 226,000.

Continuing claims climbed by 26,000 to 1.919 million, indicating persistent labor market challenges. This data suggests a softening jobs market, reinforcing expectations for potential Fed easing and adding downward pressure on the dollar.

Rate Cut Bets Build Amid Mixed Labor Signals

Markets are now pricing in nearly 49 basis points of Fed rate cuts by year-end. San Francisco Fed President Mary Daly noted the possibility of two cuts this year but stressed patience to ensure inflation targets are met. This evolving outlook is keeping the dollar stable as traders await further signals.

Traders are watching for Friday’s US April PCE Price Index and consumer data releases, which could influence Fed policy and dollar strength.

US Dollar Index (DXY) – Technical Analysis

DXY is clinging near $99.48, testing the 50-EMA at $99.48 as a potential resistance. The 200-EMA at $99.90 caps the upside, creating a narrow range. Price action is pushing against a descending trendline from earlier highs near $100.55, while support sits around $99.23 and $98.71.

Multiple wicks near $99.90 highlight failed bullish attempts, with price drifting into consolidation. If DXY breaks below $99.23, we might see a test of $98.71 or deeper toward $98.00.

A clean move above $100.55, however, could challenge the next resistance at $101.16. Traders should watch for a confirmed breakout or breakdown to catch the next move in this tightening squeeze.

GBP/USD Technical Analysis

GBP/USD is testing the $1.3470 zone, caught between a downtrend line from recent highs and an ascending trendline from mid-May. The 50-EMA near $1.3482 and the 200-EMA at $1.3458 are squeezing the price, creating a narrowing triangle.

The chart shows indecision, with price action stuck between support at $1.3414 and resistance at $1.3520. A clear break below $1.3450 could open the door to a drop toward $1.3410 or even $1.3350.

Conversely, a strong close above $1.3520 may spark a run toward $1.3590. The setup is coiling for a breakout, and traders should watch for a decisive move. Keep an eye on the trendlines—they’re pointing to an upcoming shift.

EUR/USD Technical Forecast

EUR/USD is balancing near $1.1341, hugging the 50-EMA at $1.1330 and the 200-EMA at $1.1314. The price faces resistance from a descending trendline starting from $1.1389 and is showing signs of stalling after rejecting the 0.236 Fibonacci level at $1.1347.

Multiple wicks around $1.1347 suggest buyers are struggling to break higher. If the pair breaks below $1.1321, we could see a retest of $1.1289 or even $1.1270.

However, a close above the descending trendline could push the price to $1.1389 or higher. The chart structure hints at consolidation for now, but keep an eye on clear breaks for a potential move in either direction.