US Dollar Forecast: Gains as Government Shutdown Deal Boosts GBP/USD and EUR/USD

Market Overview

During early European trade, the US Dollar Index (DXY) edged higher to around 99.55, supported by optimism that the prolonged US government shutdown could soon end. Traders are also awaiting comments from several Federal Reserve officials later today for clues on future interest rate moves.

Government Shutdown Hopes Lift the Dollar

The US Senate approved a funding deal on Monday to end the longest shutdown in US history, with the House of Representatives expected to vote soon. If passed, the bill will move to the president for final approval.

The prospect of government operations resuming has strengthened the USD, as investors anticipate smoother market conditions and a return of key economic data releases.

Economic Data Highlights Lingering Risks

Recent US data shows signs of strain. Consumer sentiment in early November fell to its lowest level in over three years, while the ADP report revealed that private employers cut an average of 11,250 jobs per week during the four weeks ending October 25.

These figures suggest rising economic uncertainty and a softening labor market, which could influence the Fed’s rate outlook.

Fed Officials’ Comments in Focus

Traders will closely monitor speeches from John Williams, Christopher Waller, Raphael Bostic, Stephen Miran, and others. Any hawkish tone could extend the USD’s gains, while dovish remarks may trigger renewed pressure on the DXY as markets reassess the likelihood of near-term rate cuts.

US Dollar Index (DXY) – Technical Analysis

The US Dollar Index (DXY) is trading near $99.55, moving within a clear descending channel that has capped upside momentum since early November. The index recently rebounded from support at $99.30, but remains below the 20-EMA, signaling that sellers still dominate short-term price action.

The RSI hovering near 45 reflects neutral momentum with limited buying strength.

A breakout above $99.70 could open the door for a move toward $99.98 or even $100.35, where the channel’s upper boundary sits. However, failure to sustain above $99.40 may invite renewed pressure toward $98.95.

GBP/USD Technical Analysis

The GBP/USD pair is trading near $1.3140, facing resistance at $1.3180, where a descending trendline from late October intersects with the 200-EMA. The pair has struggled to maintain upward momentum, forming a minor lower high while staying capped below both major moving averages.

The RSI near 45 reflects weakening buying pressure and hints at potential consolidation or a short-term pullback. If the price slips below $1.3095, selling momentum could deepen toward $1.3050 and $1.3000. However, reclaiming $1.3180 would shift bias upward, targeting $1.3230.

EUR/USD Technical Forecast

The EUR/USD pair is trading near $1.1579, showing consolidation after facing resistance around $1.1605, which aligns with a descending trendline from late October. The pair remains capped below the 200-EMA, suggesting limited bullish strength in the near term.

The 20-EMA continues to provide short-term support near $1.1560, while the RSI sits just above 50, reflecting neutral momentum. If buyers defend $1.1560, the pair could attempt another retest of $1.1605, followed by $1.1660 if momentum builds.

However, a break below $1.1540 would expose downside risk toward $1.1500. Overall, the structure remains mildly bullish as long as the pair holds above $1.1540, with traders awaiting confirmation from the trendline breakout.