US Dollar Forecast: Slides as Powell Remarks and Fed Cut Bets Weigh — GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) is trading around 99 during Thursday’s European session, extending its decline as the ongoing US government shutdown and dovish Federal Reserve outlook continue to pressure sentiment. The political impasse, now in its ninth day, continues to erode market confidence after the Senate rejected new funding proposals, raising fears of prolonged economic disruption.

Traders worry that an extended shutdown could weigh on near-term growth and delay key data releases, limiting demand for the dollar. The uncertainty has prompted investors to unwind bullish positions, keeping the greenback under sustained pressure.

Fed Cut Bets Add to Dollar’s Slide

The Fed’s September meeting minutes showed most policymakers supported the recent rate cut and remained open to further easing this year. Markets now price in a 25-basis-point cut in October and a 78% probability of another in December, according to the CME FedWatch Tool.

These expectations have curbed the dollar’s upside momentum, with investors shifting their focus toward falling US yields and looser monetary conditions.

Powell Speech in Focus

Attention now turns to Fed Chair Jerome Powell’s speech later Thursday for policy clues. Any hint of resistance to deeper cuts could stabilize the DXY, while a reaffirmation of the Fed’s dovish stance may extend the dollar’s weakness into the coming sessions.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is holding near 99.02, maintaining its bullish structure after breaking above the 50-day and 200-day EMAs. The uptrend remains intact, supported by a rising trendline from mid-September. Current price action shows consolidation below 99.18, a key resistance zone that could trigger a move toward 99.70 if breached.

Momentum indicators show mild strength, with the RSI near 69, suggesting buyers remain in control but may pause for short-term profit-taking. A healthy pullback toward 98.70 could offer a re-entry opportunity, while a break above 99.18 would confirm continuation.

Overall, DXY maintains a constructive outlook above 98.30, supported by firm trendline and EMA alignment.

GBP/USD Technical Analysis

The GBP/USD pair trades near $1.3355, extending its decline after repeated rejections from the $1.3440–$1.3450 resistance zone. The price remains capped by a descending trendline that has guided the pair lower since late September. Both the 50-EMA ($1.3439) and 200-EMA ($1.3473) hover above current levels, reinforcing the bearish outlook.

The RSI at 35 signals weakening momentum, indicating that sellers still hold the upper hand. Immediate support lies near $1.3330; a break below this level could expose $1.3245.

On the upside, reclaiming $1.3440 would be essential to challenge the trendline and shift short-term sentiment. For now, GBP/USD remains in a downtrend, with rallies likely to face selling pressure below the $1.3450 threshold.

EUR/USD Technical Forecast

The EUR/USD pair remains under pressure, trading near $1.1613 as it continues to move within a descending channel. Price action indicates rejection near the $1.1645 resistance, where previous support has turned into resistance, confirming the ongoing bearish momentum. Both the 50-EMA ($1.1690) and 200-EMA ($1.1706) slope downward, reinforcing the downside bias.

The RSI at 36 indicates weak momentum but not yet oversold, suggesting room for another leg lower. A break below $1.1590 could open the path toward $1.1560, while a rebound above $1.1645 would challenge the upper channel boundary. Overall, the EUR/USD remains vulnerable, with sellers likely to be active below the $1.1650 zone unless a clear breakout shifts momentum.