US Dollar Forecast: DXY Drops Ahead of NFP Data – Are GBP/USD and EUR/USD Set to Break Higher?

US Dollar Index (DXY) Slides to 96.50 as Retail Slump Fuels Rate Cut Bets

The US Dollar Index (DXY) fell again on Wednesday, February 11, trading around 96.55 and losing 0.31% for the day. The dollar is under pressure from weak US data and concerns about the Federal Reserve’s independence.

Disappointing Retail Sales Hammer the Dollar

The main reason for the DXY’s drop is a slowdown in retail sales. The US Census Bureau reported that retail sales stayed flat in December at $735 billion, after rising 0.6% in November.

Because of this, economists have cut their growth forecasts for the fourth quarter, making it more likely the Fed will consider bigger rate cuts in early 2026.

The “Warsh Lawsuit” and Fed Independence

Political tensions are also weighing on the dollar. President Trump’s recent remarks about his Fed Chair nominee, Kevin Warsh, have unsettled currency markets. There is speculation that the President could sue Warsh if he does not lower rates, raising global worries about the Fed’s independence.

Fed Governor Stephen Miran also said that “absolute, 100% pure independence” is not possible during crises. This view is giving those betting against the dollar more reason to expect it to weaken.

High-Stakes NFP Ahead

Now, everyone is watching for the January Non-Farm Payrolls (NFP) report, which was delayed until today because of the recent government shutdown. Analysts expect:

• 70,000 new jobs (following December’s 50k).
• Unemployment steady at 4.4%.

If the jobs number comes in below 40,000, the DXY could fall to test the key 95.55 support level. A strong result is needed to stop the dollar’s slide toward its lowest point this year.

US Dollar Index Outlook: DXY Pressures 96.30 Support as Downtrend Persists

The US Dollar Index (DXY) is trading around 96.61 on the 4-hour chart, continuing its decline after failing to break above the 97.60 to 97.80 resistance area. The price has stayed below a downward trendline from the late January high, and several bearish candles show the downtrend is holding.

DXY is now testing the 0.236 Fibonacci level at 96.34, which is an important support that matches a rising trendline from the 95.55 low. If the price falls below 96.30, it could move down to 96.02 or even retest 95.55.

On the upside, resistance is at the 0.382 Fibonacci level at 96.83 and the 0.5 level at 97.22, both backed by the 50-period moving average near 97.20. The 100-period moving average around 97.98 is still limiting any bigger recovery.

Trade idea: Consider selling if the price drops below 96.30, with a stop above 97.20 and a target of 95.55.

GBP/USD Forecast: Pound Pressures 1.3700 as Trendline Caps Gains

GBP/USD is trading near $1.3675 on the 4-hour chart, consolidating just below a downward trendline from the $1.3870 high. Recent candlesticks show rejection wicks near $1.3690 to $1.3700, which points to selling pressure close to the 0.382 Fibonacci level at $1.3691.

Price is hovering between the 0.5 Fib at $1.3635 and the 0.382 Fib at $1.3691), forming a tight range. The 50-period moving average near $1.3650 is acting as short-term support, while the 100-period MA around $1.3510 aligns with the broader ascending trendline, preserving the medium-term bullish structure.

If the price moves above $1.3700, it could rise to $1.3760. If it drops below $1.3635, it might fall to $1.3580.

Trade idea: Consider buying if the price goes above $1.3700, with a stop below $1.3635 and a target of $1.3760.

EUR/USD Forecast: Euro Tests 1.1900 Breakout Zone

EUR/USD is trading around $1.1916 on the 4-hour chart, staying above a key breakout area near $1.1890. This level used to be resistance and now acts as support. Recent candlesticks have small bodies and upper wicks near $1.1930 to $1.1950, showing the market is hesitant as it tests this supply zone.

The pair is supported by a rising trendline from the mid-January low near $1.1600, and the 50-period moving average around $1.1850 adds extra support. The 100-period moving average near $1.1765 also helps keep the trend bullish. If the price rises above $1.1985, it could move toward $1.2080. If it drops below $1.1890, it might fall to $1.1835.

Trade idea: Buy if the price goes above $1.1950, set a stop below $1.1890, and target $1.2080.