US Dollar Forecast: DXY Slides Ahead of Jobs Data – Can GBP/USD and EUR/USD Break Higher?

Market Overview

The broad-based US dollar failed to stop its downward trend and remained under pressure on Monday. As of now, the US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is trading near 97.60, showing modest losses of 0.13%. However, the reason for its bearish bias can be associated with traders’ cautious stance ahead of key US economic data and signals from the Federal Reserve.

US Jobs and Consumer Confidence Data Keep Dollar Traders Cautious

Market participants are keeping a close eye on important US economic data that was delayed by the recent partial government shutdown. However, the January jobs report is due on Wednesday and expected to show that the labor market is holding steady, with around 70,000 jobs likely to be added and the unemployment rate staying at 4.4%.

At the same time, the Michigan Consumer Sentiment Index rose to a six-month high, reaching 57.3 in February, above the expected 55.0. This is the third straight month of gains, showing that consumers are feeling more confident. Therefore,  the higher consumer confidence signals a stronger economy, but the US Dollar stays cautious as investors await jobs and inflation data.

Fed Keeps Interest Rates Steady as Economy Grows Slowly

On the policy front, the Federal Reserve is expected to keep interest rates the same in March. Fed officials have said the economy is stable but growing slowly, with few new jobs and some risk of layoffs. This cautious approach makes investors uncertain, which puts some pressure on the US dollar because traders are waiting for clearer signs about future rate changes.

At the same time, the Fed is concerned that inflation is still high. This means they are not likely to cut rates soon, which can support the US dollar. As a result, the dollar can stay sluggish until new economic data gives a clearer picture.

US Dollar Index (DXY): Index Slips Below Channel Support as $97.20 Becomes the Pivot

The US Dollar Index (DXY) is trading around $97.38 on the 2-hour chart after moving below the middle of its rising channel. Recent candlesticks have larger red bodies and small lower wicks, which suggests steady selling pressure instead of a sudden drop. The price was rejected near $97.95 to $98.00, which matches the upper channel boundary and the 61.8% Fibonacci retracement, making that area a key resistance in the short term.

The price has dropped below the 50-EMA, while the 200-EMA is still higher at about $98.60, which limits the overall trend. The DXY is now just above the $97.20 Fibonacci midpoint, a level that has recently acted as a decision point. If the price falls clearly below $97.20, it could move down to $96.83 and then $96.34. The RSI is moving toward the mid-40s, showing that momentum is fading but not yet oversold. If buyers cannot push the price back above $97.60, the downward trend will likely continue.

Trade idea: Consider selling if the price drops below $97.20, with a target of $96.40 and a stop above $97.85.

GBP/USD Technical Analysis: Tests Key Fib Support as $1.3580 Becomes Short-Term Pivot

GBP/USD is trading close to $1.3590 on the 2-hour chart, trying to steady after dropping from the $1.3850 high. Recent candlesticks have smaller bodies and longer lower wicks near $1.3535 to $1.3580, which suggests that selling pressure is easing. This zone matches the 61.8% Fibonacci retracement at about $1.3578, making it a key support level.

The price is staying near the 200-EMA at $1.3580, while the 50-EMA above $1.3635 is now acting as short-term resistance. The overall trend still follows the rising trendline from mid-January, so the move looks corrective for now. The RSI is in the low 40s, showing that momentum is slowing but not signaling a breakdown.

If the price stays above $1.3535, there is still a chance it could recover toward $1.3690 and $1.3760.

Trade idea: Consider buying near $1.3560, with a target of $1.3720 and a stop below $1.3500.

EUR/USD Technical Forecast: Trendline Support as $1.1770 Base Fuels Rebound Setup

EUR/USD is trading near $1.1850 on the 2-hour chart, steady after pulling back from the $1.2050 peak. Recent candlesticks have smaller bodies and longer lower wicks, showing buyers are stepping in on dips rather than heavy selling. The price is holding above the rising trendline from mid-January and the demand zone near $1.1770, which matches the earlier breakout area.

The pair is moving back above the 50-EMA, while the 200-EMA is lower around $1.1750, keeping the overall setup positive. This consolidation looks more like a shallow bullish channel than a breakdown. Resistance sits at $1.1895, then $1.1985, where sellers capped gains before. RSI is back in the mid-50s, showing momentum is improving but not stretched.

As long as $1.1770 holds, the path of least resistance is up, with buyers trying to regain momentum.

Trade idea: Buy near $1.1820, target $1.1980, stop below $1.1760.