US Dollar Price Forecast: DXY Pulls Back Ahead of ADP and PPI Data, GBP/USD and EUR/USD

Market Overview

During the early European session, the US Dollar Index (DXY) is trading slightly lower near 100.15 as investors respond to a new wave of dovish signals from Federal Reserve officials.

The shift in tone has strengthened expectations that policymakers are preparing to ease monetary policy at the December meeting, prompting traders to adjust positions for a softer dollar in the near term.

Fed Officials Strengthen Case for Policy Easing

Fed Governor Christopher Waller said on Monday that current data indicate labor conditions remain weak enough to justify another quarter-point cut.

San Francisco Fed President Mary Daly added that the sudden deterioration in employment supports lowering rates, while New York Fed President John Williams noted the Fed could reduce rates “in the near term” without jeopardizing its inflation objective.

Market reaction was immediate. According to the CME FedWatch Tool, traders now assign nearly an 80% probability to a 25-basis-point cut in December, a significant jump from 30% just one week earlier. The dollar weakened against major currencies as expectations for monetary easing widened.

Upcoming US Data May Influence Dollar Direction

Investors now turn their attention to key US economic releases. The ADP Employment Change, Retail Sales, and Producer Price Index (PPI) are due later today. Consensus estimates point to a 0.3% month-over-month increase in PPI and a 0.4% rise in Retail Sales.

While these figures suggest modest growth, stronger-than-expected data could limit downside pressure on the DXY and temper the market’s dovish outlook.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index is holding near the 100.30 region, but momentum has softened after failing to extend above the recent consolidation zone. Price continues to respect the broader rising trendline, with support seen near 99.72, where previous pullbacks stabilized.

The 20-EMA is flattening, suggesting a pause in directional strength, while the 200-EMA remains firmly upward, keeping the larger structure intact. If the index stays above the trendline, it may continue to move sideways before attempting another push higher. A break below 99.72 would shift focus toward 99.00.

GBP/USD Technical Analysis

GBP/USD continues to trade inside a tightening structure, with price holding near $1.3114 as the pair consolidates between converging trendlines. The formation resembles a contracting pattern, with repeated rejections from the upper boundary near $1.3124 and support forming around $1.3085.

The 20-EMA is flattening while the 200-EMA remains above price, keeping upside momentum limited.

A close above $1.3124 would signal a potential break from the pattern’s upper edge, opening room for a short-term bullish continuation. Failure to break higher may pull the pair back toward $1.3085 or even $1.3039 as the lower trendline reassesses support.

EUR/USD Technical Forecast

EUR/USD continues to trade within a broader downtrend, capped by a descending trendline that has rejected every rally since early October. Price is currently stabilizing near $1.1520, but the pair remains below both the 20-EMA and 200-EMA, keeping the bias tilted downward.

Recent attempts to recover have stalled around $1.1550, showing limited follow-through from buyers.

The RSI has recovered modestly from oversold territory but is still below mid-range, suggesting momentum remains weak. If EUR/USD fails to break above the 20-EMA, the pair may drift back toward $1.1500 and $1.1470. A close above $1.1590 would be needed to challenge the descending structure and shift the near-term tone.