US Dollar Forecast: Rebounds on Weak Jobs Data and Fed Cut Bets, GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) edged higher around 97.90 on Monday after losing more than 0.5% in the previous session. The rebound comes as markets weigh rising expectations of Federal Reserve rate cuts following weaker-than-expected U.S. labor market data.

Weak Jobs Data Fuels Fed Cut Expectations

The Bureau of Labor Statistics reported that Nonfarm Payrolls rose only 22,000 in August, well below forecasts of 75,000 and far lower than July’s revised 79,000. The unemployment rate climbed to 4.3%, while wage growth slowed.

According to the CME FedWatch Tool, traders now see a 92% probability of a 25-basis-point cut in September, with some betting on a larger 50 bps move.

Fed Officials Signal Caution

Chicago Fed President Austan Goolsbee noted that weaker employment typically justifies easing but expressed doubt about the timing, pointing to still-elevated inflation.

His remarks highlight the Fed’s balancing act between stabilizing the labor market and keeping price pressures in check.

Geopolitical Risks Remain in Focus

On the geopolitical front, President Donald Trump confirmed European leaders will meet him in Washington this week to discuss the Russia-Ukraine conflict.

The announcement followed a large-scale Russian air assault, underscoring rising tensions and adding another layer of uncertainty for global markets.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near 97.90, consolidating after a sharp pullback from 98.43. Price is moving below both the 50-EMA at 97.92 and the 200-EMA at 98.06, keeping short-term momentum under pressure.

Fibonacci levels show immediate resistance around 97.81–97.93, while support is aligned at 97.43 and 97.25. A break above the descending trendline could signal recovery toward 98.00, but failure to clear the EMA cluster risks further downside.

The RSI at 41 suggests bearish momentum is easing but not yet reversed. Traders should watch for confirmation: holding above 97.43 may stabilize the index, while a drop below 97.25 could extend weakness toward 97.08.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3510, consolidating after a sharp rebound from the $1.3360 area. The pair remains supported by an ascending channel, with the 50-EMA at $1.3481 and the 200-EMA at $1.3469 providing a strong base.

Resistance is noted at $1.3544 and $1.3594, levels that could attract buyers if the uptrend continues.

On the downside, key supports are at $1.3452 and $1.3413, protecting the broader bullish structure. The RSI at 56 indicates moderate upward momentum without overbought pressure.

EUR/USD Technical Forecast

EUR/USD is trading near $1.1728, holding above a rising trendline that has supported the pair since the $1.1630 low. The chart shows price reclaiming the 50-EMA at $1.1697 and staying above the 200-EMA at $1.1673, signaling improving momentum.

Fibonacci retracements highlight $1.1709 as key short-term support, while resistance is seen at $1.1759 and $1.1780.

If the trendline holds, the bias stays positive; however, a break below $1.1709 may expose downside toward $1.1679. Buyers remain favored while price stays above the EMA cluster.