US Dollar Price Forecast: Falls as Fed Rate Cut Odds Hit Over 87% – GBP/USD and EUR/USD Outlook

Market Overview

During early European trading, the US Dollar remained under pressure, unable to recover from recent declines as markets positioned ahead of the Federal Reserve’s December policy decision.

Expectations for a 25-basis-point rate cut, which would bring the federal funds rate to 3.50%–3.75%, continue to rise. The CME FedWatch tool now assigns over 87% probability to this move, a key factor weighing on the currency.

Markets Await Powell’s Comments and Updated Projections

Attention now turns to Chair Jerome Powell’s press conference and the release of the Summary of Economic Projections, including the revised dot plot. Analysts anticipate what some describe as a hawkish cut, a reduction in rates accompanied by cautious forward guidance.

Such messaging could limit further USD weakness, but traders prefer to wait for clarity before adjusting positions.

Dollar Likely to Stay Soft Until Fed Guidance Arrives

The broader risk-averse tone in financial markets has reinforced a wait-and-see approach, leaving the Dollar without strong support in the near term.

Meaningful movement is unlikely until the Fed outlines its policy path and signals how it views inflation, growth, and the need for additional easing in 2026.

With all attention fixed on the December FOMC meeting, Powell’s remarks and the dot plot will be central in shaping the Dollar’s short-term direction.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index is trading near $99.06, holding inside a clear descending channel, with price repeatedly rejecting the upper boundary. Recent 2H candles show small bodies and long wicks, reflecting hesitation around $99.12 resistance.

The 20-EMA remains below the 50-EMA, keeping the short-term trend tilted lower. Immediate support sits at $98.76, followed by $98.57, both levels where earlier reactions formed.

A break below $98.57 exposes the channel base near $98.39. On the upside, regaining $99.32 is the first sign of strength.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3330, holding inside a well-defined ascending channel after bouncing off support at $1.3311. Recent 2H candles show tight consolidation with smaller bodies, signalling indecision as price sits just above the 20-EMA.

The pair continues to respect the mid-channel trendline, but momentum has softened following repeated failures to clear $1.3384.

A break above $1.3384 would expose the next resistance at $1.3424, where prior highs align with the channel’s upper boundary. On the downside, a drop below $1.3311 could trigger a move toward $1.3269, followed by stronger support at $1.3227.

EUR/USD Technical Forecast

EUR/USD is trading near $1.1644, holding within its ascending channel after bouncing from support at $1.1616. Recent 2H candles show higher lows but smaller bodies, signalling hesitation as price moves around the 20-EMA.

The pair remains above the 50-EMA, keeping the short-term bias constructive. A push above $1.1681 would expose the upper channel resistance near $1.1708.
On the downside, losing $1.1616 could open a move toward $1.1591, where the 200-EMA aligns with prior structure.