US Dollar Forecast: Dollar Struggles After UK GDP Miss and Fed Speeches – GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) is trading near $99.20, holding just above a key support zone after a volatile Thursday session dominated by a heavy mix of UK data, Eurozone releases, and multiple FOMC speeches.

The dollar attempted to stabilize early in the day, but lingering weakness in global growth indicators kept sentiment cautious. Despite modest intraday rebounds, the broader tone around the greenback remains defensive.

UK Data Misses Drive Market Caution

The British pound came under pressure after a series of UK data releases fell short of expectations, indirectly offering some temporary support to the DXY.

Monthly GDP slipped -0.1% against a forecast of 0.0%, while industrial production recorded a sharp -2.0% decline compared with the expected -0.5%. Manufacturing production also dropped -1.7%, underperforming both the forecast and previous readings.

Only quarterly GDP provided a small positive surprise at 0.1%. These softer numbers weighed on overall risk sentiment and reinforced concerns about slowing UK economic momentum. Eurozone industrial production also disappointed at 0.2%, well below the 0.7% forecast, further pressuring European currencies.

Fed Commentary Highlights Uncertainty

Several Federal Reserve officials, including Collins, Daly, Musalem, Kashkari, and Hammack, delivered remarks throughout the day, but none endorsed immediate policy easing.

Their tone remained data-dependent, signaling that the central bank needs clearer visibility before adjusting rates. This kept rate-cut expectations anchored for early 2026 and provided little directional support for the dollar.

Meanwhile, US Crude Oil Inventories rose 6.4M versus a 1.0M forecast, hinting at softer demand and contributing to broader market caution.

Friday’s Data Ahead

Friday’s calendar is lighter for the US, with attention shifting to Natural Gas Storage, expected at 34B compared with 33B previously. In Europe, traders will monitor French Final CPI, still forecast at 0.1%, and the Flash Eurozone GDP, projected to hold steady at 0.2%.

With the dollar still struggling to reclaim momentum, upcoming data will play a critical role in determining whether the DXY can recover or continues to trade near its lows.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index is sliding within a clear downward channel, with sellers keeping control since the rejection near 100.26. Price is now hovering around 99.18, sitting just above support at 98.99, while the 20-EMA continues to slope lower, reinforcing the short-term bearish tone. The 200-EMA is positioned below at 99.00, creating a key decision area.

The RSI remains weak and stays under the 50 line, signaling limited buying strength. A break below 98.99 could open the way toward 98.57, while any rebound will face resistance near 99.36 and the channel’s upper boundary.

GBP/USD Technical Analysis

GBP/USD is holding near $1.3150 after retreating from the upper boundary of its rising channel. The pair remains supported by the channel’s lower trendline and the rising 20-EMA, signaling that buyers are still active on dips.

The RSI has eased from earlier highs but stays above 50, showing that momentum remains mildly positive even as the pair consolidates. A rebound from this area could send GBP/USD back toward $1.3210, while a break below the trendline risks a move toward $1.3085.

EUR/USD Technical Forecast

The EUR/USD pair is holding firm after extending its rebound from the $1.1500 zone, climbing back into a short-term ascending channel. Price is now testing resistance near the $1.1680 area, sitting just under the 200-EMA, which remains a key barrier for further upside. The 20-EMA is trending higher, showing improving short-term momentum.

RSI remains above 60, indicating steady buying interest, though it’s flattening as the pair approaches overhead resistance.

A strong break above $1.1680 could open room toward the $1.1715 region, while failure to clear the 200-EMA may pull EUR/USD back toward channel support near $1.1600.