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

Market Overview

The US Dollar Index (DXY) hovered near 97.55 during Monday’s Asian session. While stable, the dollar faces downside risk as softer US labor market data heightens expectations for a Federal Reserve rate cut at the September meeting.

Labor Market Weakness and Fed Outlook

Jobless claims recently reached their highest level since October 2021, while nonfarm payrolls undershot forecasts. Despite stronger consumer inflation, markets are pricing in a 25-basis-point cut in September, with a smaller chance of a 50-point move.

Morgan Stanley and Deutsche Bank both anticipate three cuts this year, projecting reductions at the Fed’s remaining 2025 meetings.

Miran’s Confirmation in Focus

Markets are also watching the expected Senate vote on Stephen Miran, President Trump’s economic adviser, who could be sworn in as a Federal Reserve governor.

His confirmation may influence policy direction and reinforce expectations for a more accommodative stance.

Outlook for the Dollar

Looking ahead, the DXY will remain sensitive to Fed commentary and incoming data. Market pricing suggests easing through 2026 to cushion recession risks.

Any surprises in employment or inflation figures could spark sharp moves in the dollar, leaving traders cautious ahead of this week’s events.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading at 97.59, consolidating inside a symmetrical triangle as price compresses between lower highs and higher lows. The 50-period EMA at 97.69 and the 200-period EMA at 97.91 are creating layered resistance, keeping upward momentum capped.

Key resistance stands at 97.87 and 98.08, while immediate support lies at 97.33 and 97.10. The RSI is around 46, signaling neutral momentum with no strong directional bias.

A breakout above 97.87 could open the way toward 98.42, while a breakdown below 97.33 risks a slide toward 97.10. Traders are watching closely for a decisive move as the triangle nears its apex.

GBP/USD Technical Analysis

GBP/USD is trading at $1.3566, consolidating above trendline support and holding steady around the 50-period EMA at $1.3543. The 200-period EMA at $1.3503 provides a stronger base below. Immediate resistance stands at $1.3591, followed by $1.3618, while support levels sit at $1.3548 and $1.3523.

The RSI at 55 signals balanced momentum, with neither strong buying nor selling pressure dominating. If price clears $1.3591, it could open the way toward $1.3618 and $1.3646.

On the downside, a break below $1.3548 risks a retest of $1.3523. The pair is showing signs of building upward momentum, but traders are awaiting confirmation from a clean breakout.

EUR/USD Technical Forecast

EUR/USD is trading at $1.1733, consolidating just above trendline support. The 50-period EMA at $1.1720 and the 200-period EMA at $1.1690 are providing a supportive base, keeping the pair stable. Immediate resistance stands at $1.1756, followed by $1.1775, while downside levels to watch are $1.1721 and $1.1701.

Recent candles suggest sideways movement with buyers defending dips but lacking strong momentum. The RSI at 53 indicates neutral conditions, neither overbought nor oversold.

A push above $1.1756 could open the way toward $1.1806, while a break below $1.1701 risks a deeper pullback toward $1.1661. Traders are waiting for a breakout to confirm the next trend direction.