US Dollar Forecast: Greenback Steadies as Traders Await FOMC Guidance and NFP Delay – GBP/USD and EUR/USD

Market Overview98.2

During the Asian trading session on Tuesday, the US Dollar Index (DXY) extended its advance for a second consecutive day, trading near 98.33. The Greenback found support after Kansas City Fed President Jeffrey Schmid said inflation remains too high and emphasized the need for the Federal Reserve to maintain its credibility.

Schmid added that current policy settings are “well-calibrated,” reinforcing confidence in the Fed’s cautious stance.

Markets Still Expect Rate Cuts Despite Fed Confidence

Despite the uptick, traders continue to price in potential Fed rate cuts. The CME FedWatch Tool indicates a 94% probability of a rate cut in October and an 84% chance in December, reflecting expectations that slowing job growth and weaker ADP employment and JOLTS data will prompt the Fed to ease.

However, Schmid’s remarks indicate policymakers may delay cuts until inflation shows more convincing progress toward the 2% target.

Government Shutdown Adds Economic Uncertainty

The US government shutdown, now in its seventh day, is dampening market sentiment and delaying key reports, including September’s Nonfarm Payrolls. The White House denied reports of layoffs but warned that prolonged disruptions could hurt employment and growth.

With no progress in Congress, uncertainty remains high. The combination of policy gridlock and slowing data may limit the Dollar’s upside as investors weigh the risk of an economic slowdown and the likelihood of near-term Fed easing.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is holding near 98.33 after rebounding from support around 98.08. The index continues to respect an ascending trendline from late September, suggesting buyers remain active. Both the 50-day EMA (97.91) and 200-day EMA (97.85) have converged, reinforcing a strong technical base.

A break above 98.61 could signal a push toward 99.02, where previous highs align. RSI near 63 indicates improving bullish momentum without overbought pressure, suggesting more room to rise.

However, a close below 98.08 would weaken the short-term bias and expose the index to a retest of 97.80. For now, as long as DXY stays above 98.00, sentiment favors continued strength in the greenback.

GBP/USD Technical Analysis

GBP/USD is trading around $1.3440, slipping after failing to sustain above $1.3490, where both the 50-day EMA ($1.3461) and 200-day EMA ($1.3483) converge. The pair remains under pressure within a descending channel, suggesting sellers retain short-term control.

Support lies near $1.3400, followed by $1.3338, which aligns with late-September lows. RSI at 46 signals weakening momentum, reflecting cautious sentiment ahead of major U.S. data releases.

If buyers reclaim $1.3510, a rebound toward $1.3560 may develop, but sustained rejection at current levels could extend the downside. Overall, the pair’s structure remains neutral to bearish, with traders watching whether the $1.3400 level can hold as the next key test.

EUR/USD Technical Forecast

EUR/USD remains under mild pressure, trading around $1.1680 after failing to sustain gains above the $1.1740 resistance area. The pair continues to move below a descending trendline from mid-September, showing that sellers still dominate.

The 50-day EMA at $1.1726 and 200-day EMA at $1.1715 have both turned flat, suggesting a lack of strong bullish momentum. Immediate support lies near $1.1655, followed by $1.1612 if pressure intensifies. The RSI around 40 signals weak momentum but not yet oversold, leaving room for limited downside.

A recovery above $1.1740 would be needed to shift bias toward $1.1820, while staying below this level keeps the short-term tone bearish with risks leaning toward further declines.