US Dollar Forecast: Gains Hold Ahead of ADP Jobs Data and Fed Remarks – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index ($DXY) is trading around 100.15, holding steady after a strong rally that saw it test a three-month high. The greenback’s momentum was supported by improving U.S. data and cautious remarks from Federal Reserve officials, signaling limited scope for additional rate cuts this year.

On Tuesday, the RCM/TIPP Economic Optimism Index fell slightly to 43.9 from 48.3, underscoring fragile consumer sentiment despite a resilient labor market.

European Data Mixed as Growth Concerns Persist

In Europe, sentiment was weighed down by weak labor and fiscal figures. Spanish unemployment rose sharply by 22.1K, missing forecasts of 5.2K, while France reported a budget deficit of €155.4B, marginally better than the previous €157.5B shortfall.

However, industrial activity offered a glimmer of relief, with German factory orders rising 1.1% and French industrial production up 0.8%, both beating expectations and hinting at mild stabilization in the eurozone’s manufacturing sector.

Focus Shifts to U.S. Labor and Services Data

Looking ahead, markets are awaiting the ADP Non-Farm Employment Change, forecast at +32K after a -32K decline last month. The ISM Services PMI is projected to edge up to 50.7 from 50.0, while the Final Services PMI is expected at 55.2, unchanged.

Any upside surprise in these indicators could strengthen the dollar further, pressuring gold, silver, and major forex pairs like EUR/USD and GBP/USD.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading near 100.15, holding steady after a strong rally from the 98.80 support zone. The index remains above both its 50-day EMA (99.50) and 200-day EMA (98.79), confirming bullish momentum. However, the RSI at 68 signals the dollar is nearing overbought territory, hinting at potential short-term consolidation.

A break above 100.35 could extend gains toward 100.63 and 100.92, while failure to hold above 99.94 may invite a retest of 99.53. The recent higher-highs pattern suggests buyers remain in control, though fading momentum calls for caution ahead of upcoming U.S. economic data.

The overall bias stays positive unless DXY drops below the key trendline support near 99.10.

GBP/USD Technical Analysis

The GBP/USD is trading near $1.303, struggling to recover after breaking below its long-term ascending trendline support. The pair remains under pressure as sellers dominate below both the 50-day EMA ($1.335) and 200-day EMA ($1.326), confirming a bearish bias.

The RSI sits near 37, reflecting weak momentum but hinting at possible stabilization if buyers defend the $1.296–$1.290 zone. A sustained move above $1.314 could signal the start of a corrective rebound toward $1.326, while failure to hold above $1.300 may trigger further downside toward $1.286 and $1.277.

For now, sentiment stays negative, with any short-term recovery likely capped unless the pound reclaims the 200-day EMA.

EUR/USD Technical Forecast

The EUR/USD is trading near $1.148, hovering close to its recent lows as sellers maintain pressure within a descending channel. The pair remains below both the 50-EMA ($1.156) and 200-EMA ($1.163), reinforcing the prevailing bearish structure. The RSI at 32 signals oversold conditions, though no clear reversal signal has emerged yet.

A minor rebound toward $1.154 could test resistance, but sustained weakness below $1.147 risks further decline toward $1.144 and $1.141. The broader trend remains negative as long as price stays below the descending trendline.

For a meaningful recovery, bulls need a close above $1.158 to regain control, targeting $1.162 next. Until then, downside momentum dominates in the short term.