US Dollar Price Forecast: Fades Below Key Resistance Amid Rate Cut Bets – GBP/USD and EUR/USD

Market Overview

During Thursday’s Asian session, the U.S. Dollar Index (DXY) held near 98.20, stabilizing after a 0.5% drop in the prior session. The move followed softer-than-expected U.S. labor market data and growing speculation over the next Federal Reserve Chair.

Rate Cut Odds Climb as NFP Disappoints

July’s Nonfarm Payrolls report fell short of expectations, reinforcing the view that the labor market is losing momentum. As a result, the CME FedWatch Tool now shows a 95% probability of a 25 basis point rate cut in September, up sharply from 48% just a week earlier.

Traders will closely watch this week’s Initial Jobless Claims for confirmation of continued weakness.

Fed Leadership Speculation Fuels Uncertainty

Market focus has also shifted to who will lead the Fed next. President Trump is expected to announce his pick by week’s end, with candidates including Kevin Hassett and Kevin Warsh. A more dovish appointment could add pressure on the dollar.

Policymaker Remarks Highlight Mixed Signals

Fed officials remain cautious. Mary Daly noted that inflation risks persist, while Susan Collins and Lisa Cook pointed to ongoing uncertainty. While inflation appears contained, weakening labor data may force the Fed’s hand sooner than expected.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is under pressure, consolidating below the 50- and 100-period EMAs on the 4-hour chart. After rejecting the 98.84 resistance, DXY failed to sustain above 98.30, turning that level into immediate resistance. The recent breakdown below the moving averages suggests weakening bullish momentum.

The current pattern hints at a potential bearish continuation, with price action likely to form a lower high before retesting 97.83. A decisive break below this level could open the path toward 97.50 and the ascending trendline support.

Unless DXY reclaims the 98.30–98.50 zone and breaks above the 98.84 barrier, the short-term outlook favors a gradual descent.

GBP/USD Technical Analysis

GBP/USD is attempting a recovery, currently testing the 50% Fibonacci retracement at 1.3364 after a strong rebound from the 1.3140 low. Price has broken above the 100-period EMA and is now challenging the 50-period EMA, suggesting growing bullish pressure.

A sustained break above the 61.8% level at 1.3417 would mark a deeper retracement of the recent downtrend and could expose the 0.786 Fib at 1.3427 as the next resistance.

If the pair fails to break 1.3417, bears may regain control, especially if broader dollar strength returns.

EUR/USD Technical Forecast

EUR/USD has broken above its descending trendline and is now trading near 1.1674, signaling a shift in market sentiment. The pair has cleared the 50- and 100-period EMAs, reinforcing bullish momentum and invalidating previous resistance zones.

A clean break above the 1.1647–1.1650 cluster has opened room for a possible move toward the 1.1718 level. As long as EUR/USD remains above the trendline and holds above the 1.1647 breakout zone, momentum favors buyers. =