US Dollar Forecast: Traders Brace for Powell’s Comments After Rate Cut, GBP/USD and EUR/USD

Market Overview

The U.S. dollar index (DXY) traded near 98.65 early Tuesday, showing little direction as traders awaited fresh catalysts from this week’s U.S. and European data.

The greenback held steady following Monday’s mixed figures, with the German Ifo Business Climate Index improving slightly to 88.4, while Eurozone M3 Money Supply growth softened to 2.8%.

In the U.K., the CBI Realized Sales index slipped to -27, reflecting ongoing retail sector weakness.

Economic Events on Tuesday, October 28

Today’s focus turns to the German GfK Consumer Climate, expected at -22.0, and U.S. releases including the Richmond Manufacturing Index and CB Consumer Confidence, both key indicators of business and consumer sentiment.

The Conference Board’s confidence reading is forecast to ease to 93.4 from 94.2, signaling cautious optimism amid slowing economic momentum.

Events Ahead on Wednesday, October 29

Markets are bracing for the Federal Reserve’s rate decision on Wednesday, where policymakers are widely expected to cut rates by 25 basis points to 4.00%. The accompanying FOMC statement and Chair Powell’s press conference will be closely watched for signals of future policy direction.

Additional data, including U.S. Pending Home Sales, Crude Oil Inventories, and Eurozone GDP, will provide further insight into global economic resilience heading into November.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near 98.65, showing early signs of weakness after failing to sustain above the 99.14 resistance zone. On the 4-hour chart, the price has broken below the ascending trendline and is testing the confluence area of the 50-EMA (98.82) and 200-EMA (98.45) — a critical support band that often dictates short-term direction.

Candlestick patterns display smaller bodies with long wicks, indicating indecision, while the RSI at 36 suggests waning bullish momentum but not yet oversold.

A sustained drop below 98.38 could open room toward 98.02 and 97.60, whereas reclaiming 99.14 may reinstate upward momentum toward 99.55. For now, DXY’s bias remains cautiously neutral to bearish.

GBP/USD Technical Analysis

The GBP/USD pair trades around $1.3355, attempting to recover within a descending triangle on the 4-hour chart. Price is testing resistance near $1.3380, close to the 50-EMA ($1.3357), while the 200-EMA ($1.3411) caps further upside. The pair continues to form lower highs, indicating that sellers remain active near trendline resistance.

The RSI at 52 shows mild positive momentum but not enough to confirm a trend shift. A breakout above $1.3410 could trigger a move toward $1.3455–$1.3520, while rejection here may send price back toward $1.3290 and $1.3260 support.

Until a decisive breakout occurs, GBP/USD remains range-bound with a slight upside bias above $1.3300.

EUR/USD Technical Forecast

The EUR/USD pair is trading near $1.1660, holding within a tightening symmetrical triangle pattern on the 4-hour chart. Price is currently testing the confluence of the 50-EMA ($1.1632) and 200-EMA ($1.1662), suggesting a critical area for directional confirmation. The RSI at 55 shows mild bullish momentum but lacks strong conviction.

A breakout above $1.1715 could trigger further upside toward $1.1778, while a rejection may send the pair back toward $1.1600 and $1.1538. The formation of higher lows hints at gradual accumulation, though resistance near the descending trendline continues to cap gains.