US Dollar Price Forecast: CPI Report and Fed Rate Bets Shape Market Mood – GBP/USD and EUR/USD

Market Overview

During Friday’s Asian session, the US Dollar Index (DXY) traded higher around 99.07, up 0.14%, extending its recent recovery despite political and economic uncertainty.

The greenback’s strength reflects cautious positioning ahead of the September Consumer Price Index (CPI) report, a key data point likely to shape the Federal Reserve’s next policy move.

Government Shutdown Deepens Market Caution

The ongoing US government shutdown has entered its 24th day, now the second-longest in history. The Senate again failed to pass a temporary funding bill, intensifying fiscal concerns and uncertainty among investors. While the political gridlock has disrupted key economic releases, the dollar remains supported by safe-haven flows amid broader market unease.

Fed Rate Cut Expectations Cap Gains

Despite modest gains, the dollar’s upside is limited by growing expectations for rate cuts. A Reuters poll suggests the Fed could lower rates by 25 basis points next week and again in December. Fed Chair Jerome Powell has signaled the FOMC will rely on alternative data sources until official reports resume.

Inflation Data to Drive Near-Term Direction

Markets now await the September CPI report, expected to show a 0.4% monthly and 3.1% annual rise. A stronger reading may bolster the dollar, while weaker inflation could renew downside pressure.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near 99.03, showing signs of consolidation within a symmetrical triangle pattern on the 4-hour chart. The price remains supported above the 50-EMA at 98.81 and the 200-EMA at 98.40, suggesting buyers are defending key levels. However, resistance near 99.14 continues to cap upside momentum.

A breakout above this zone could trigger gains toward 99.55 and 99.96, while a drop below 98.70 may open the path toward 98.38. The RSI around 57 reflects a balanced market, with neither side showing clear dominance.

GBP/USD Technical Analysis

GBP/USD continues to trade under pressure near 1.3330, staying below the 50-day EMA at 1.3370 and the descending trendline resistance around 1.3380. The pair’s repeated failures to close above these levels show that sellers remain active.

The RSI hovering near 41 signals weak momentum, reflecting a lack of buying interest. If the price breaks below 1.3280, it could expose further downside toward 1.3185.

On the upside, a clear move above 1.3380 would be needed to confirm short-term strength and potentially target 1.3470. For now, the trend remains bearish to neutral, with traders awaiting U.S. CPI data for direction as the pair consolidates within a tight range.

EUR/USD Technical Forecast

EUR/USD is trading near 1.1607, consolidating within a symmetrical triangle pattern as traders await direction from upcoming U.S. inflation data. The pair remains capped by the 50-EMA at 1.1626 and 200-EMA at 1.1665, highlighting persistent selling pressure.

On the downside, support is seen near 1.1570 and 1.1535, levels that have held firm since early October. The RSI around 45 indicates muted momentum, reflecting market indecision. A breakout above 1.1650 could open the door toward 1.1710, while a drop below 1.1570 may trigger a decline toward 1.1490.