US Dollar Price Forecast: DXY Breaks Trendline as NFP Looms – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) is trading around 98.80 after gaining traction in early trading. The move reflects a mix of factors, including soft labor data, weaker ISM Services PMI, cautious Fed commentary, and renewed optimism over U.S.-China trade talks.

Labor Market Softens Ahead of NFP Report

Recent job data added uncertainty to the dollar’s outlook. Weekly jobless claims rose to 247,000, above the forecasted 235,000, while ADP private payrolls added just 37,000 in May, far below the expected 115,000.

Economists project Friday’s NFP report will show 130,000 new jobs, down from April’s 177,000. Despite this, the unemployment rate is expected to remain at 4.2%.

Fed Signals Patience Amid Economic Uncertainty

Minneapolis Fed President Neel Kashkari acknowledged labor market weakness but stressed the Fed would remain patient. Markets are now pricing in limited rate action, which is keeping the dollar steady without strong directional bias.

Meanwhile, sentiment improved after President Trump confirmed a positive, extended call with Chinese officials. Easing trade tensions with China is viewed as supportive of U.S. growth, helping the DXY hold ground despite mixed macroeconomic data.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is showing early signs of a potential rebound as it breaks above short-term trendline resistance near $98.88. After finding a firm base around $98.57, the index is now testing its 50-period exponential moving average (EMA) at $98.95, which remains a critical barrier for further upside. A sustained move above this level could trigger a push toward the next resistance levels at $99.34 and $99.66.

However, momentum remains fragile. The 200-period EMA at $99.47 looms overhead, and unless bulls can establish a higher low above $98.57, DXY may stay capped. For now, this recovery appears more corrective than trend-defining.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3548 after retreating from a recent swing high around $1.3583. Price is now testing dynamic support at the 50 EMA ($1.3543), which aligns closely with horizontal structure and a key pivot zone. A sustained hold here could spark a rebound toward resistance at $1.3583 and $1.3616.

However, a break below $1.3539 would expose the next support area, located near $1.3491, and the ascending trendline.

Momentum appears to be cooling, and if buyers fail to defend the current zone, a deeper correction toward the 200 EMA at $1.3465 is likely to occur. Bulls need a decisive bounce soon to maintain control.

EUR/USD Technical Forecast

EUR/USD is consolidating near $1.1433 after a strong multi-session uptrend. The pair is holding just above trendline support and the 50 EMA at $1.1409, both of which align with the recent breakout level.

Price action remains constructive, but failure to sustain above the rising trendline could expose support at $1.1365 or even $1.1346 (200 EMA).

Bulls will want to see a clear bounce from this zone to maintain upward momentum and retest resistance at $1.1457 and $1.1495. Until then, momentum appears to be stalling, suggesting a period of consolidation or a possible pullback if buyers don’t step in soon.