US Dollar Forecast: DXY Rangebound Between 50- and 200-Day Moving Averages

U.S. Dollar Weakens as Traders Position Ahead of Data Wave

The U.S. Dollar Index (DXY) edged slightly higher early Friday, stabilizing near 99.00 after defending Thursday’s session low at 98.991. However, the index remains under pressure and is on track for a 0.3% weekly loss as traders brace for a flood of delayed economic data following the resolution of the government shutdown.

At 15:30 GMT, DXY is trading 99.345, up 0.117 or +0.12%.

Despite firmer Treasury yields and fading expectations for a December rate cut, the greenback failed to gain traction. It slipped to a two-week low against the euro on Thursday and continues to lag against most major currencies. The euro climbed back above $1.16, while the Swiss franc held near multi-week highs at 0.7889 per dollar. Against a basket of currencies, the dollar hovered near 99.08.

Fed Tone Turns Cautious, But Dollar Fails to Respond

Several Federal Reserve officials delivered more hawkish commentary this week, citing inflation concerns and a relatively stable labor market. However, the market reaction was muted. Futures markets now show just over a 50% chance of a 25-basis-point cut in December, down from earlier in the week. January rate cut odds remain nearly fully priced, while long-term rate expectations for 2026 are largely unchanged.

Analysts say the lack of clarity from economic data—much of which was delayed or canceled during the shutdown—is contributing to cautious positioning. The White House confirmed that the October unemployment rate may never be published, as the survey required to produce it wasn’t conducted.

Global FX Markets React to U.S. Uncertainty

The dollar’s weakness was mirrored by outsized moves in global currencies. The British pound slipped to $1.3164 after a report indicated the U.K. government may shelve plans to raise income taxes. The yen firmed slightly to 154.74 per dollar, still down 0.7% for the week.

Treasury Yields Steady as Equities Retreat

The 10-year Treasury yield was little changed at 4.121%, while the 2-year and 30-year yields held near 3.591% and 4.727%, respectively. A broad sell-off in equities, led by weakness in tech stocks, pressured yields earlier in the week, though investors now appear to be pausing ahead of fresh economic signals.

Outlook: Dollar Likely to Stay Rangebound With Downside Risk

With uncertainty surrounding upcoming U.S. data releases and mixed signals from Fed officials, the DXY is likely to remain rangebound in the short term.

Technically, the key support lies at the 50-day moving average at 98.528. A sustained break below this level could open the door for a sharper decline.

On the upside, regaining control above the short-term pivot at 99.463 could trigger a near-term rebound toward the 200-day moving average at 100.082.

Until a decisive move occurs, traders should expect choppy conditions driven by data risk and Fed rate path speculation.

More Information in our Economic Calendar.