US Dollar Forecast: Market Braces for PMI Data as Fed Commentary Looms – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) trades near $99.78, holding firm as investors await a wave of manufacturing data across Europe, the U.K., and the U.S. today. Monday’s session was relatively calm, with the dollar supported by stronger Treasury yields and a cautious sentiment following last week’s 25-basis-point Fed rate cut.

Market expectations for another cut in December have eased to 71%, down from over 90%, according to CME’s FedWatch Tool.

European and U.K. PMIs to Set Early Tone

In Europe, preliminary data is expected to show slight stabilization in factory activity. Italy’s Manufacturing PMI is forecast at 49.3 versus 49.0 prior, while France and Germany are expected to hold steady at 48.3 and 49.6, respectively.

The U.K. Manufacturing PMI, due at 9:30 GMT, is projected at 49.6, unchanged from September, signaling continued contraction but no further deterioration.

ISM PMI to Test Dollar Momentum

Later today, the U.S. ISM Manufacturing PMI is forecast at 49.4, marginally above 49.1 in September, while ISM Prices are expected at 62.4 versus 61.9 prior. Any upside surprise could reinforce the Fed’s cautious tone and lift the dollar, while weaker prints may revive rate-cut expectations.

With multiple FOMC speakers lined up, traders will closely watch policy remarks for clues on how the Fed interprets incoming data amid slowing global growth.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading near 99.78, holding gains after breaking above a descending trendline resistance at 99.41. The 50 EMA at 99.17 remains above the 200 EMA at 98.63, confirming a short-term bullish structure. Momentum indicators show strength, with RSI at 69, approaching overbought territory but not signaling exhaustion yet.

Immediate resistance lies near 100.10, followed by 100.63, while support is seen around 99.41 and 98.98. As long as price holds above 99.40, the upward bias is likely to continue. However, a break below 98.98 could shift sentiment toward consolidation.

GBP/USD Technical Analysis

The GBP/USD pair is trading near $1.3130, struggling to recover after a sharp decline below the key $1.3160 level. The 50 EMA at $1.3244 and 200 EMA at $1.3363 continue to slope downward, confirming a dominant bearish trend. RSI at 36 shows weak momentum, though oversold conditions suggest limited downside in the short term.

Immediate support is seen at $1.3060, followed by $1.2963, while resistance lies at $1.3160 and $1.3240. A sustained break below $1.3060 could deepen losses toward $1.2960, whereas reclaiming $1.3160 may allow a corrective rebound.

EUR/USD Technical Forecast

The EUR/USD pair is trading near $1.1527, struggling to gain momentum after repeated rejections around $1.1560. The price remains under both the 50 EMA ($1.1600) and 200 EMA ($1.1649), reflecting sustained bearish pressure. The RSI at 34 shows weak momentum but hints at possible short-term stabilization near support at $1.1510.

A break below this level could open the way toward $1.1477 and $1.1440. On the upside, buyers need a close above $1.1580 to challenge $1.1620 and the descending trendline resistance.