US Dollar Forecast: Holds Firm Before Powell’s Jackson Hole Speech, GBP/USD and EUR/USD

Market Overview

During Thursday’s Asian session, the US Dollar Index (DXY) held near 98.30, supported by reduced bets on a September Federal Reserve rate cut.

The shift followed July Producer Price Index (PPI) data, which came in above expectations and signaled lingering inflationary pressures.

Fed Cut Odds Fall, Dollar Gains

The CME FedWatch Tool now shows an 83% chance of a September cut, down from full pricing last week. Markets are also factoring in 54 basis points of easing by year-end.

The stronger PPI print curbed expectations for swift policy loosening, lending support to the dollar.

Markets Await PMI Data and Powell’s Remarks

Attention now turns to preliminary August S&P Global PMI readings, due Thursday, which could provide early signals on growth momentum.

The focus then shifts to Fed Chair Jerome Powell’s Friday address at the Jackson Hole Symposium, where traders expect clarity on both near-term cuts and the longer-term policy path.

A dovish tone could weigh on the dollar, while a cautious stance may sustain recent strength.

Political Pressure Raises Fed Independence Risks

Political developments add another layer of uncertainty. Former President Donald Trump has urged Fed Governor Lisa Cook to resign over alleged financial issues.

Analysts caution that such pressure could erode central bank independence and raise concerns about the credibility of U.S. monetary policy.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is consolidating near 98.20 after failing to break above the descending trendline resistance. Price action is coiling within a symmetrical triangle, suggesting an imminent breakout. The 50-EMA (98.17) and 100-EMA (98.18) are converging, signaling indecision. On the downside, support rests at 97.89 and 97.53, with a breakdown exposing 97.12.

RSI at 53 reflects neutral momentum, leaning slightly bullish but capped by trendline pressure. A sustained close above 98.65 could trigger upside toward 99.00–99.32, while rejection risks a pullback to 97.80.

Traders are likely to await clarity from Fed Chair Powell’s Jackson Hole speech before committing to directional moves, keeping DXY rangebound in the short term.

GBP/USD Technical Analysis

The GBP/USD pair is holding near $1.3470, attempting to stabilize after breaking below a rising channel structure. The 50-EMA ($1.3485) and 100-EMA ($1.3463) are converging, highlighting indecision and a potential shift in momentum. Immediate resistance lies at $1.3483, while support levels are seen at $1.3397 and $1.3343.

The RSI at 41 points to bearish momentum, with the risk of further downside if sellers push the pair beneath $1.3400. A sustained break below $1.3340 could accelerate losses toward $1.3282. On the upside, recovery above $1.3550 would re-open the path toward $1.3592–$1.3652.

Overall, GBP/USD is tilting bearish in the short term, with sellers in control unless buyers reclaim ground above the $1.3485–$1.3550 resistance zone.

EUR/USD Technical Forecast

The EUR/USD pair is consolidating around $1.1650, trading below a descending trendline that has capped recent rallies. The 50-EMA ($1.1655) and 100-EMA ($1.1646) are flattening, reflecting indecision and a lack of strong momentum. Immediate support rests at $1.1593, followed by $1.1530, while resistance stands at $1.1724 near the trendline barrier.

RSI at 47 signals neutral to bearish momentum, suggesting limited upside unless bulls reclaim $1.1700+. A breakout above $1.1725 would expose $1.1785–$1.1834, while failure to hold $1.1590 risks a deeper move toward $1.1530 and $1.1467.