US Dollar Forecast: DXY Steady Ahead of Fed Meeting as Markets Brace for Volatility – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) is trading near 98.83, showing limited movement as traders assess mixed U.S. data and await the Federal Reserve’s rate announcement. Tuesday’s Conference Board Consumer Confidence rose to 94.6, slightly above expectations of 93.4, suggesting resilience in household sentiment.

Meanwhile, the S&P/Case-Shiller 20-City Index increased 1.6% year-on-year, signaling strength in the housing market.

However, the Richmond Manufacturing Index improved only modestly to -4 from -17, pointing to ongoing softness in regional factory activity. These figures have kept the dollar stable, with investors avoiding large positions ahead of the central bank’s decision.

Fed Rate Cut in Focus as Volatility Looms

Markets expect the Federal Reserve to cut interest rates by 25 basis points to 4.00% later today. The FOMC statement and Chair Jerome Powell’s press conference will be closely watched for guidance on future monetary policy. A dovish tone, suggesting a pause or slower tightening path, could weaken the dollar, while any signal of continued caution on inflation may support a short-term rebound.

Traders will also monitor Pending Home Sales and Crude Oil Inventories for additional clues on demand trends and inflationary pressures.

Overall, the dollar remains range-bound but poised for volatility as the Fed’s rate decision could redefine market expectations heading into November’s trading cycle.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) trades around 98.83, moving within a tightening symmetrical triangle. The 50-EMA at 98.81 and 200-EMA at 98.67 are converging, signaling indecision before a breakout.

A close above 99.13 could trigger an upward move toward 99.47 and 99.83, while a drop below 98.56 may open the way toward 98.31 and 98.02.

The RSI near 53 shows balanced momentum after a mild rebound from oversold levels, suggesting limited conviction from buyers or sellers.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3230, slipping below the ascending trendline support as selling pressure intensifies. The pair remains under both the 50-EMA ($1.3335) and 200-EMA ($1.3403), signaling a bearish bias.

Immediate support lies at $1.3200, followed by $1.3140, while resistance stands near $1.3290 and $1.3368. The RSI at 31 suggests oversold conditions, hinting at a possible short-term rebound, but broader momentum favors sellers.

A daily close below $1.3200 could open the path toward $1.3120, while recovery above $1.3290 may signal short-term stabilization.

EUR/USD Technical Forecast

EUR/USD is trading near $1.1635, moving within a tightening symmetrical triangle. The pair is testing both the 50-EMA ($1.1638) and 200-EMA ($1.1644), signaling indecision before the next breakout. Resistance is seen near $1.1680, while support holds around $1.1600 and $1.1552.

A move above $1.1680 could pave the way toward $1.1770, while a drop below $1.1600 may expose $1.1550. The RSI near 46 indicates slowing momentum after failing to hold above the 200-EMA.