US Dollar Price Forecast: DXY Slips Toward 96 as Markets Question the Fed – GBP/USD and EUR/USD in Focus

Market Overview

The broad-based US dollar failed to stop its bearish bias and remains under pressure near a four-year low, around the 96.00 level. As of now, the US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, is trading at 96.08. However, the reason for its sluggish movement can be associated with concerns over the Federal Reserve’s independence and ongoing economic uncertainties, which continue to undermine the Greenback.

Fed Worries Keep Dollar Weak

The US Federal Reserve, as expected, kept its policy rates unchanged on Wednesday. Two Fed Governors, Stephen Miran and Christopher Waller, disagreed and preferred a 25-basis-point cut. During the post-meeting press conference, Fed Chair Jerome Powell said inflation is still higher than the 2% target. Despite these hawkish comments, the US Dollar (USD) didn’t get much support because of several negative factors weighing on it.

Traders now expect the Fed to keep rates steady until at least the end of this quarter, and possibly until Powell’s term ends in May, though they still see a chance of two rate cuts in 2026. Adding to the uncertainty, Powell is facing a criminal investigation, and there’s a move to remove Fed Governor Lisa Cook. These issues around the Fed’s independence have kept the US dollar under pressure.

Traders Eye US Jobless Claims for Dollar Movement

Looking forward, traders are awaiting the release of the US Weekly Initial Jobless Claims, which are expected at 206K, up from the previous 200K. This report will give a clear picture of the US labor market’s health.

If claims rise more than expected, it may weaken the dollar further, signaling a slowing job market. Conversely, lower-than-expected claims could give the dollar a temporary boost.

US Dollar Index Technical Analysis: Descending Triangle Resolves Below $97

The US Dollar Index is trading around $96.15, continuing its decline after breaking down from a descending triangle on the daily chart. The price moved below the $97.50 to $97.00 support area, which is now acting as resistance. Recent candles have long bearish bodies and small lower wicks, showing strong selling pressure.

The index is also trading well under the 50-day moving average, adding to the downside risk. Based on Fibonacci projections, the next support is near $95.60, then $94.80. The RSI is below 40, which signals weak momentum and little buying interest so far. Any bounce toward $97.00 to $97.50 is likely just a correction while the overall trend stays bearish.

Trade idea: Consider selling if the price rebounds near $97.00, with a target of $95.60 and a stop above $97.80.

GBP/USD Technical Analysis: Sterling Near $1.3840, Fibonacci Extension Keeps Upside Bias Intact

GBP/USD is trading near $1.3835 to $1.3840 on the 4-hour chart after breaking out from the $1.3600 level. The price remains above the 1.618 Fibonacci extension at $1.3710, which supports the ongoing trend.

Recent candles have small bodies and only slight pullbacks, which points to controlled profit-taking instead of selling pressure. The trendline from mid-January is still holding, and the next resistance is between $1.3940 and $1.4030, matching higher Fibonacci levels.

On the downside, support is found at $1.3710 and then at $1.3630, where previous consolidation took place. The RSI stays above 65, showing strong momentum and little downside risk.

Trade idea: Consider buying on pullbacks near $1.3720, with a target of $1.3950 and a stop below $1.3630.

EUR/USD Technical Analysis: Holds $1.1970: Rising Trendline Keeps Upside Path Open

EUR/USD is trading around $1.1975, consolidating after a strong move higher on the 2-hour chart. The price is staying above a rising trendline from the $1.1680 base, which keeps the short-term outlook positive. Recent candles have small bodies and balanced wicks, suggesting the market is pausing rather than reversing.

Immediate support is at $1.1960 to $1.1935, where the trendline and previous breakout levels meet. If the price drops further, the 50-period moving average near $1.1895 is the next support to watch. The RSI is between 55 and 60, showing momentum is cooling but the trend has not changed. If the price moves above $1.2000, the next targets are $1.2050 and $1.2210.

Trade idea: Consider buying on pullbacks near $1.1960, with a target of $1.2050 and a stop below $1.1890.