US Dollar Forecast: Traders Eye 84% Rate Cut Odds After Powell, GBP/USD and EUR/USD

Market Overview

During the Asian trading session, the US Dollar Index (DXY), which tracks the Greenback against six major currencies, eased to 98.40 on Tuesday after a modest recovery the previous day.

The US dollar remains under pressure as markets factor in both political developments and expectations of monetary easing.

Fed Governor Removal Sparks Market Concerns

Selling pressure intensified after President Donald Trump removed Fed Governor Lisa Cook over allegations related to mortgages. Analysts view the move as a direct challenge to the central bank’s independence.

According to the Wall Street Journal, Cook pushed back against political pressure, stating she had “no intention of being bullied to step down.”

Market participants worry this action could influence the Fed’s decision-making, potentially accelerating interest rate cuts. While investors are not showing signs of panic, expectations for earlier easing are rising.

Rate Cut Bets Grow Ahead of September Meeting

The CME FedWatch Tool shows an 84% probability of a rate cut at the Fed’s September meeting, up sharply from 62% a month ago.

Fed Chair Jerome Powell’s remarks at Jackson Hole reinforced this outlook, noting risks tied to both inflation and a weakening labor market.

The combination of political interference and a dovish policy shift leaves the dollar vulnerable, with traders preparing for renewed downside pressure.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is consolidating near $98.40, trading inside a symmetrical triangle that has kept the price capped for weeks. On the 4-hour chart, the 50-EMA at $98.21 and 100-EMA at $98.24 sit as immediate support, while resistance comes from the descending trendline near $98.80.

The RSI at 48 signals neutral momentum, showing neither strong buying nor selling pressure. Meanwhile, the MACD hovers flat around the zero line, hinting at indecision.

A breakout above $98.80 could open the door toward $99.10 and $99.30, while a breakdown under $97.65 risks deeper losses toward $97.10. Until then, traders are likely to see range-bound movement within the triangle structure.

GBP/USD Technical Analysis

The GBP/USD pair is trading near $1.3458, testing key resistance after recently breaking down from an ascending channel. On the 4-hour chart, the 50-EMA at $1.3475 and 100-EMA at $1.3463 are converging, creating a ceiling that limits upside attempts.

The RSI sits at 46, showing muted momentum, while the MACD remains flat, signaling indecision. Sellers are active below $1.3544, and a rejection here could trigger a move back toward $1.3391 and possibly $1.3313.

For buyers, a sustained close above $1.3544 would be needed to shift momentum back to the upside. For now, the bias leans cautious, with price action trapped under moving average resistance.

EUR/USD Technical Forecast

The EUR/USD pair is trading near $1.1624, holding just above an ascending trendline that has supported price since early August. On the 4-hour chart, both the 50-EMA ($1.1653) and 100-EMA ($1.1647) are acting as overhead resistance, creating a pivot zone that bulls need to reclaim for upside momentum.

The RSI at 43 signals mild bearish pressure, while the MACD remains flat below zero, showing momentum is weak.

A sustained move above $1.1656 could push price toward $1.1723, while failure to hold the trendline risks a drop back toward $1.1581. For now, the pair remains at a critical juncture, with traders watching for a breakout or breakdown confirmation.