US Dollar Forecast: Dollar Falls as Soft Retail and Jobs Data Shift Policy Odds — GBP/USD and EUR/USD

Market Overview

During the European session on Wednesday, the US Dollar Index (DXY) continued to drift lower, trading near 99.60 as weaker US economic releases strengthened expectations of a Federal Reserve rate cut in December. Although uncertainty often supports the dollar, the latest data has shifted sentiment and pressured the currency.

Soft Retail, Inflation, and Job Data Weigh on USD

US indicators released this week have been broadly disappointing. Retail Sales for September rose 0.2%, undershooting both the previous 0.6% increase and the 0.4% forecast, pointing to a cooling consumer sector.

Producer inflation also moderated. While headline PPI held at 2.7% YoY, core PPI eased to 2.6% from the previously revised 2.9%, reinforcing the view that underlying pricing pressures are fading.

Labor market data added to the weaker tone. ADP figures showed private employers shedding an average of 13,500 jobs in the four weeks ending November 8, a sharp deterioration from –2.5K previously. The slowdown suggests demand for labor is softening, giving the Fed additional scope to consider easing.

Market Pricing Favors December Rate Cut

The combination of weaker spending, softer inflation, and declining employment has led traders to scale back bullish dollar positions. Market pricing now leans strongly toward a December rate cut, keeping the DXY under pressure.

What Comes Next?

Traders remain cautious ahead of upcoming US releases—Durable Goods Orders, Initial Jobless Claims, Chicago PMI, and the Fed’s Beige Book. Stronger data could offer the dollar temporary support. However, unless economic indicators stabilize, the broader bias remains tilted toward further dollar weakness.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index is pulling back toward the rising trendline near 99.40, where buyers have stepped in several times this month. Price is currently holding between the 99.86 and 99.40 levels, with the 20-EMA sitting below the 200-EMA, showing weakened short-term momentum. The RSI is recovering from oversold territory, suggesting the downside may slow as price approaches trendline support.

A bounce from 99.40 could lift the index back toward 99.86, followed by a possible move to 100.38 if buyers gain traction. If the trendline breaks, the next support sits at 99.00, a zone that could attract stronger demand. The broader structure remains constructive as long as DXY holds above 99.00.

GBP/USD Technical Analysis

GBP/USD is holding near $1.3195 after breaking out of its consolidation pattern and reclaiming the 200-EMA around $1.3155. The breakout from the wedge structure has strengthened short-term momentum, with the RSI staying above 60 and showing steady buying interest.

If bulls maintain control above $1.3155, the pair may retest resistance at $1.3217, followed by $1.3273 if momentum continues.

If price slips back below $1.3155, support sits at $1.3108, where the 20-EMA also aligns. A deeper pullback could revisit $1.3062, the lower boundary of the previous pattern.

The overall bias stays constructive as long as GBP/USD holds above $1.3108, with higher lows supporting the recovery structure.

EUR/USD Technical Forecast

EUR/USD is testing the $1.1595 region after rebounding sharply from support at $1.1553. Price has reclaimed the 20-EMA and is now approaching the 200-EMA near $1.1607, which has capped upside moves several times this month. The RSI has pushed above 60, showing improving momentum, but no overbought pressure yet.

If buyers break above $1.1607, the next resistance sits at $1.1654, followed by the descending trendline near $1.1710. Failure to clear the 200-EMA could send the pair back toward $1.1553, with deeper support at $1.1511.

The broader structure shows consolidation within a contracting pattern, and EUR/USD remains neutral-to-bullish as long as it holds above $1.1553.