US Dollar Price Forecast: Daly, Waller Shift Tone Toward Easing – GBP/USD and EUR/USD

Market Overview

During Friday’s Asian session, the US Dollar Index (DXY) pulled back to around $98.50, giving up recent gains. The decline followed growing market expectations of a more accommodative Federal Reserve and easing global risk concerns, both of which weighed on dollar demand.

Fed Comments Hint at Sooner Rate Cuts

The move was driven by remarks from several Fed officials suggesting that policy easing could come sooner than previously anticipated. Mary Daly of the San Francisco Fed said two rate cuts this year would be “reasonable” and cautioned against delaying action, citing a higher potential neutral rate—possibly near 3%.

Fed Governor Christopher Waller supported a possible 25 basis point cut at the July meeting, citing softening growth and contained inflation. Adriana Kugler also suggested holding rates steady for now, noting stable employment and moderating inflation risks.

Strong Data Offsets Dovish Tone

Still, stronger-than-expected US data cooled immediate expectations for a rate cut. June retail sales rose 0.6% month-over-month, reversing May’s 0.9% drop, while jobless claims fell to 221,000, below forecasts. These figures suggest the Fed may adopt a cautious approach despite dovish commentary.

Investors are now watching Friday’s University of Michigan Consumer Sentiment report, as well as Building Permits and Housing Starts, for further signs on growth and Fed direction.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near $98.45, holding just above the 50-EMA at $98.36 after failing to clear resistance at $98.75. While the index remains above the 200-EMA ($97.95), upward momentum is slowing as price action struggles under a descending trendline.

A clean break above $98.75 could open the path to $99.02 and $99.26. However, failure to hold $98.39 may lead to a decline toward $98.15 and potentially $97.82.

GBP/USD Technical Analysis

GBP/USD is attempting a bullish breakout above $1.3456, supported by an ascending trendline and a base near $1.3417. Price is testing the 50-EMA at $1.3434, and holding above this level could expose $1.3486 and $1.3517.

A rejection here, however, risks a drop toward $1.3396 and $1.3341. The pair remains well below the 200-EMA at $1.3524, suggesting that any upside may face resistance.

Traders are watching for sustained price action above the short-term trendline and key resistance to confirm a shift in momentum. (edited)

EUR/USD Technical Forecast

EUR/USD is trading near $1.1631, struggling below the 50-EMA resistance at $1.1632, with downside pressure intact inside a descending channel. The pair bounced off support at $1.1580, but buyers are yet to regain control.

A break above $1.1658 could challenge $1.1692 and $1.1720, while failure to clear resistance may keep the pair vulnerable to $1.1612 and $1.1556.

Price remains below the 200-EMA at $1.1657, limiting upside potential for now. Traders will be watching for a decisive close above the channel to signal reversal.