US Dollar Price Forecast: Falls Ahead of US NFP Figures – GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) is trading near 98.30, hovering close to its lowest levels in several weeks as investors reassess the US growth outlook. The greenback remains under pressure following a steady softening in economic momentum and growing confidence that US interest rates have peaked.

Treasury yields have eased, and positioning shows traders increasingly cautious about rebuilding long USD exposure ahead of key labor and consumption data.

Yesterday’s Data Undermines Dollar Sentiment

Monday’s data delivered a clear negative signal for the dollar. The Empire State Manufacturing Index plunged to -3.9, sharply missing expectations of 9.8 and reversing from 18.7 previously. The contractionary reading reinforced concerns that US manufacturing is losing momentum as tighter financial conditions filter through the economy.

The weak survey result weighed on the dollar broadly, especially against cyclical and high-beta currencies, as it strengthened the narrative of slowing growth rather than sticky inflation.

Markets interpreted the data as consistent with a Federal Reserve that can afford to stay patient, rather than reassert a hawkish stance.

Today’s Events: Forecast vs Previous

Attention now turns to a packed US calendar. Non-Farm Payrolls are forecast at 51K, well below the prior 119K, while the unemployment rate is expected to tick up to 4.5% from 4.4%. Average hourly earnings are seen rising 0.3% m/m, slightly firmer than the previous 0.2%, keeping wage pressures in focus.

On the consumption side, retail sales are forecast at 0.1%, softer than the prior 0.2%, with core sales easing to 0.2% from 0.3%. Later, Flash Manufacturing PMI is expected at 52.0 versus 52.2, while Services PMI is forecast at 54.0, down from 54.1.

Together, the data mix suggests slowing growth with only modest inflation risk, a backdrop that keeps the dollar vulnerable unless surprises turn decisively stronger.

US Dollar Index (DXY) – Technical Analysis

The US Dollar Index (DXY) is trading near 98.29 on the 4-hour chart, holding just above recent lows after a steady decline. Recent candlesticks show small bodies with longer lower wicks, suggesting selling pressure is slowing, though buyers haven’t regained control yet. Price remains within a clear descending channel, keeping the short-term bias tilted lower.

DXY is trading below the 50-EMA near 99.10 and the 100-EMA around 99.30, both acting as overhead resistance and reinforcing the bearish structure. The prior breakdown below 98.95 has turned that level into resistance, limiting recovery attempts.

Immediate support sits near 98.10, followed by 97.80, which aligns with a previous reaction low and the lower channel boundary. A break below this zone could open room toward 97.45. On the upside, rebounds may stall near 98.60, then 99.30.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3365 on the 4-hour chart, consolidating after a steady advance inside a well-defined ascending channel. Recent candlesticks show smaller bodies with short wicks, suggesting a pause in momentum rather than distribution. Price is holding above the channel midpoint and the 50-EMA near $1.3340, keeping the short-term structure intact.

The broader trendline from late November remains upward sloping, while the 100-EMA around $1.3285 continues to act as deeper dynamic support. Resistance is clustered near $1.3425–$1.3470, where prior highs and the upper channel boundary converge. A break above this zone could open the path toward $1.3510.

On the downside, initial support sits at $1.3330, followed by $1.3280. RSI is hovering near 55, indicating balanced momentum and favoring range trading within the rising channel unless a clear breakout occurs.

EUR/USD Technical Forecast

EUR/USD is trading near $1.1748 on the 4-hour chart, consolidating after a sharp upside breakout earlier this month. Recent candlesticks show smaller bodies with mixed wicks near the highs, signaling hesitation rather than aggressive selling. Price is holding above the former breakout zone around $1.1720, which now acts as short-term support.

The pair remains supported above the rising trendline from late November, as well as the 50-EMA near $1.1690 and the 100-EMA around $1.1615, keeping the broader structure constructive. Resistance is clustered near $1.1765–$1.1790, where prior highs capped price action. A clean break above this zone could open room toward $1.1830.

On the downside, a sustained move below $1.1720 would expose $1.1685, then $1.1650. RSI is hovering near 60, reflecting positive momentum without overbought conditions, favoring consolidation with a mild bullish bias.