US Dollar Forecast: Fed Cuts Loom, Traders Eye GDP Data – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) eased in Asian trading to $97.83, as the pullback comes amid growing confidence that the Federal Reserve will deliver further rate cuts before year-end. Still, the absence of broad selling underscores cautious sentiment, with traders reluctant to take on aggressive bearish positions.

Fed Policy Outlook Shapes Sentiment

Market participants are pricing in two more cuts in October and December, following September’s 25 basis point reduction. This outlook has added pressure on the Greenback, though Fed Chair Jerome Powell’s warning against easing too quickly has tempered expectations.

Powell emphasized that premature cuts could undermine inflation control and potentially force a policy reversal. His comments helped steady the dollar, limiting downside momentum.

Packed U.S. Data Calendar in Focus

Attention now turns to a busy U.S. economic schedule. The final estimate for second-quarter GDP is expected to confirm growth at 3.3%, while the GDP price index is forecast to hold at 2.0%.

Weekly jobless claims are projected at 233K, a slight increase from 231K previously, suggesting labor market resilience. Core durable goods orders are expected to decline 0.1% after last month’s 1.0% gain, while headline orders are forecast to contract 0.3%.

Traders are also monitoring the U.S. goods trade balance, expected at –$95.7 billion, and wholesale inventories, seen rising 0.2%. Later in the day, remarks from several Federal Reserve officials, including Miran, Goolsbee, Schmid, and Williams, may add clarity on the policy outlook.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is holding near $97.83 after reclaiming both the 50-EMA ($97.52) and 200-EMA ($97.57), signaling improving momentum. Price action has broken above a short-term descending trendline, with higher lows forming since September 20. The RSI at 66 shows strong buying interest but isn’t yet overextended, keeping room for further upside.

Immediate resistance sits at $98.08, followed by $98.36. A clear break above these levels could open a move toward $98.64. On the downside, $97.20 serves as key support, with $96.85 next if momentum fades.

The structure leans bullish as long as DXY holds above $97.50, supported by the rising channel.

GBP/USD Technical Analysis

The GBP/USD pair trades around $1.3450, extending its decline after failing to hold above the $1.3537 resistance. Price remains capped by a descending trendline from recent highs, reflecting sustained bearish momentum. The pair also trades below both the 50-EMA ($1.3498) and the 200-EMA ($1.3522), reinforcing downside pressure.

The RSI at 36 signals weak momentum, approaching oversold conditions, though not yet at extreme levels. Key support sits at $1.3427, with a deeper floor near $1.3375. A break below these levels could accelerate losses.

On the upside, bulls would need a decisive close above $1.3537 to neutralize the current bearish trend and target recovery toward $1.3592.

EUR/USD Technical Forecast

The EUR/USD pair is trading around $1.1740, holding near the lower boundary of its ascending channel. Price has slipped under the 50-EMA ($1.1772) but is finding support just above the 200-EMA ($1.1748). The structure shows repeated higher lows since early August, keeping the broader uptrend intact despite recent pressure.

The RSI at 36 signals weakening momentum, edging closer to oversold territory, suggesting potential for a short-term bounce if support holds. Immediate resistance sits near $1.1774, while a breakdown under $1.1726 could trigger deeper losses toward $1.1682.

For now, the pair remains at a pivotal level — holding above the trendline keeps bulls in play, but a decisive break lower could shift control to sellers.