US Dollar Forecast: DXY Eyes Breakout on ADP, NFP Signals – GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) hovered around 96.75 in the Asian session on Wednesday as traders awaited June’s ADP Employment Change report. Market sentiment remained cautious, supported by recent macroeconomic data but tempered by fiscal and policy uncertainty.

Resilient Economic Data Lends Support

The ISM Manufacturing PMI rose to 49.0 in June from 48.5, signaling modest improvement, though still under the 50 contraction threshold.

Meanwhile, job openings surged to 7.76 million in May, well above the 7.3 million forecast, underpinning labor market strength and offering near-term support for the greenback.

Fed Policy, Budget Debate Add Complexity

Federal Reserve Chair Jerome Powell reiterated a data-dependent stance, leaving the door open for potential easing if economic conditions warrant it.

Treasury Secretary Bessent added that a rate cut is possible by September, reinforcing dovish market expectations.

Fiscal Debate and Jobs Data in Focus

The Senate narrowly passed President Trump’s budget bill, which could add trillions to the national debt. With the bill now in the House, fiscal uncertainty looms.

Investors are focused on today’s ADP jobs data for further clarity on labor trends and the Fed’s potential next move.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading at 96.78, showing a minor uptick after falling to its lowest level since February 2022. The index remains under pressure, moving within a well-defined descending channel. Both the 50-EMA and 200-EMA continue to act as resistance, currently positioned at 97.07 and 97.99, respectively.

Market attention is focused on upcoming U.S. labor market data, with Wednesday’s ADP and Friday’s Nonfarm Payrolls expected to influence near-term direction. Rate cut expectations remain elevated, with a 75% probability of a rate cut by September.

For now, the dollar needs a sustained break above 97.20 to challenge the broader downtrend. Without a strong catalyst, the index may revisit support levels at 96.10 or even 95.82 in the sessions ahead.

GBP/USD Technical Analysis

GBP/USD is trading around 1.3738, holding above its short-term trendline support and the 50-period EMA at 1.3710. The pair has shown resilience since the June 24 breakout above 1.3630, but upward momentum is now stalling below 1.3780.

Price action remains broadly constructive, but the repeated failure to break above 1.3780 suggests the bulls are losing momentum.

Immediate support lies at 1.3723; a break below this level could trigger a slide toward 1.3673. On the upside, sustained strength above 1.3780 would open the door to 1.3818 and 1.3859.

EUR/USD Technical Forecast

The EUR/USD pair is trading near 1.1784, showing signs of fatigue after rallying within a defined ascending channel since June 22. Price action remains supported by the 50-EMA at 1.1740, with the 200-EMA far below at 1.1598, confirming the broader uptrend.

However, the pair is now testing the lower boundary of the channel, and failure to hold above 1.1760 could trigger a retest of 1.1710. On the upside, 1.1828 and 1.1869 are immediate resistance levels.