US Dollar Forecast: Fed Caution Fuels Dollar Strength Into NFP — GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) continued higher on Thursday, holding above the 100.00 mark as investors reassessed expectations for the Federal Reserve’s next policy move.

The dollar’s momentum comes as markets wait for the delayed US September Nonfarm Payrolls (NFP) report, which is expected to carry more weight after recent shifts in interest-rate expectations.

Fed Minutes Highlight Cautious Policy Outlook

Minutes from the October 28–29 FOMC meeting show policymakers remain divided on the timing of future rate adjustments.

While most officials noted that gradual cuts may be appropriate, several expressed doubt that a December reduction is necessary. The lack of consensus has introduced additional uncertainty into market expectations.

Rate-Cut Odds Decline, Lifting the Dollar

The CME FedWatch Tool now assigns only a 33% probability to a 25-basis-point cut in December, sharply lower than 63% a week earlier. The shift has supported the dollar, which gained more than 0.5% in the previous session and is nearing the five-month peak of 100.36 set on November 5.

The move reflects a more cautious stance among investors as they adjust to a reduced likelihood of near-term easing.

Employment Data Delay Adds to Uncertainty

The Bureau of Labor Statistics confirmed that it will not publish the October jobs report due to incomplete household survey data. Instead, those figures will be included in the delayed November release.

Traders now view the upcoming labor numbers as a central driver for the Fed’s next steps, keeping attention firmly on employment trends and wage dynamics.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) has broken out of its downward channel, moving sharply above the 100.00 level and holding near 100.23. The breakout was driven by a strong impulse candle that cleared both the channel top and the 20-EMA, shifting momentum firmly upward. Price is now consolidating just below 100.30, which is acting as initial resistance.

The 50-EMA is turning higher, supporting the short-term bullish trend. RSI has eased slightly from overbought territory but remains elevated, showing that buyers are still in control. If DXY holds above 99.86, the structure stays constructive.

A close above 100.30 could open room toward 100.69, while a drop back inside the channel would weaken the breakout.

GBP/USD Technical Analysis

GBPUSD is attempting to stabilize after sliding toward the $1.3037 support zone, where price briefly reacted before recovering slightly. The pair remains below the 20-EMA and 50-EMA on the 4h chart, keeping short-term momentum tilted lower. Recent candles show hesitant buying, but no strong follow-through yet.

The Fibonacci retracement from the latest swing leg highlights $1.3105 as the first corrective barrier, followed by $1.3148 if buyers gain traction. RSI is still suppressed near oversold territory, suggesting momentum hasn’t fully turned.

If $1.3037 breaks, pressure may extend toward $1.3011. A move back above $1.3105 is needed to signal a more meaningful recovery toward $1.3185.

EUR/USD Technical Forecast

EUR/USD continues to trade under pressure after breaking below the ascending channel and slipping under the 20-EMA and 50-EMA on the 4h chart. The pair is now hovering just above the $1.1500 support region, where price paused earlier this month.

Momentum remains weak, with the RSI sitting near oversold territory and showing no sign of recovery yet.

If sellers maintain control, a move toward $1.1480 and $1.1467 becomes likely. Any rebound will face immediate resistance at $1.1543, followed by $1.1609, where the 50-EMA aligns with previous structure.