US Dollar Price Forecast: Falls as Fed Rate Cut Bets Build, GBP/USD and EUR/USD

Market Overview

During early Asian hours Monday, the U.S. Dollar Index (DXY), which tracks the greenback against six major peers, hovered near 97.70 after four straight sessions of declines.

With U.S. markets closed for the Labor Day holiday, trading remained subdued, though investors continued to monitor Federal Reserve signals and trade policy developments.

Fed Policy Expectations Weigh on Dollar

The dollar faces pressure as markets anticipate a rate cut in September. San Francisco Fed President Mary Daly said over the weekend that policymakers are prepared to ease policy and argued that tariff-driven inflation is likely temporary. Her remarks reinforced expectations for a softer stance, prompting traders to adjust positions.

Inflation Data Offers Some Support

Recent inflation figures provided stability for the dollar. The PCE Price Index held steady at 2.6% year-over-year in July, while core PCE rose 2.9%, matching forecasts and edging up from June’s 2.8%.

On a monthly basis, the core measure increased 0.3%, reflecting moderate price growth and supporting a cautious Fed approach.

Trade Uncertainty Clouds Outlook

Adding to the dollar’s mixed outlook, a U.S. appeals court upheld a ruling declaring broad Trump-era tariffs unlawful.

While officials emphasized continued negotiations with trading partners, the decision introduces fresh uncertainty over U.S. trade policy—an element that could influence currency markets in the weeks ahead.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index is trading near 97.66, testing a key support zone around 97.63 after slipping below its 50-EMA at 98.07. The chart shows a descending triangle pattern forming, with lower highs meeting a flat support base, often signaling pressure on the downside.

Momentum indicators confirm weakness: the RSI is at 37, pointing to bearish bias, while the MACD remains in negative territory with no sign of recovery yet.

A break under 97.63 could trigger a move toward 97.12 and possibly 96.74, while recovery above 98.22 is needed to shift sentiment. Overall, downside risks dominate unless buyers defend the current floor.

GBP/USD Technical Analysis

GBP/USD is trading at 1.3528, supported by an ascending trendline from the August lows. Price is currently above both the 50-EMA (1.3488) and 200-EMA (1.3467), reinforcing bullish momentum.

The RSI is at 59, showing steady buying pressure without being overextended, while the MACD is flat but holding in positive territory. Immediate resistance sits near 1.3594, and a break above could open the way toward 1.3670.

On the downside, the key support is at 1.3427, with the trendline providing an additional floor. As long as the pair holds above the EMAs and the rising trendline, the bias leans bullish, but a close below 1.3427 would shift momentum toward 1.3313.

EUR/USD Technical Forecast

EUR/USD is trading at 1.1718, showing steady gains after bouncing from support near 1.1655. Price is holding above both the 50-EMA (1.1660) and 200-EMA (1.1637), signaling a constructive short-term trend.

Momentum indicators support this view: the RSI is at 62, pointing to continued strength without being overbought, while the MACD is positive with histogram bars turning higher. Key resistance lies at 1.1741, and a close above this level could open the way toward 1.1790.

On the downside, 1.1655 remains the main support, followed by 1.1581 if weakness returns. Overall, EUR/USD is leaning bullish, with buyers maintaining control as long as price stays above the EMAs.