US Dollar Price Forecast: Falls as Government Shutdown Extends – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) trades slightly lower near $98.90 in early European hours on Wednesday, marking a pause after three straight sessions of gains.

The prolonged U.S. government shutdown, now in its 22nd day, has begun weighing on sentiment as lawmakers failed once again to pass a funding bill, with the Senate’s 50–43 vote falling short of the required threshold.

A continued funding deadlock threatens to dent investor confidence and disrupt key government functions, delaying critical data releases from the Bureau of Labor Statistics and Census Bureau. This absence of data complicates the Federal Reserve’s upcoming policy decisions.

Market Eyes Fed’s Next Move

According to the CME FedWatch Tool, traders now price in a 98.9% probability of a 25 basis-point rate cut at the October 29 Fed meeting, only slightly lower than yesterday’s 99.4%. The shift suggests markets largely expect a dovish policy stance amid fiscal uncertainty and reduced economic visibility.

Trade Hopes Cushion Dollar Losses

Some optimism remains as U.S.–China trade developments help curb downside pressure. U.S. Treasury Secretary Scott Bessent is expected to meet with Chinese officials this week to discuss de-escalation efforts, while President Donald Trump hinted that a “good deal” could emerge in an upcoming meeting with President Xi Jinping.

Still, with no firm timeline in place, uncertainty continues to cap bullish momentum for the dollar.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near 98.88, holding steady after bouncing from trendline support around 98.30. The index remains above both the 50-EMA (98.69) and 200-EMA (98.32), indicating a mildly bullish structure. Immediate resistance sits near 99.12, and a break above this zone could open the way toward 99.54.

The RSI at 59 suggests moderate strength, with room for further upside before approaching overbought conditions. However, if DXY falls back below 98.70, it could signal a short-term pullback toward 98.38.

Overall, momentum remains cautiously positive, with traders watching for confirmation above 99.10 to extend gains or a drop below 98.70 to shift sentiment neutral.

GBP/USD Technical Analysis

The GBP/USD pair is trading near $1.3380, showing limited momentum as it hovers just below the 50-EMA ($1.3399) and 200-EMA ($1.3433). The pair remains capped by a descending trendline, highlighting continued bearish sentiment in the medium term.

A sustained break below $1.3365 could pressure the pair toward $1.3257, while a move above $1.3430 might encourage buyers to retest the $1.3474 resistance zone. The RSI at 45 signals subdued momentum, suggesting the market may remain range-bound unless a clear catalyst drives direction.

Overall, the outlook leans neutral-to-bearish, with traders watching for a decisive breakout to define the next move.

EUR/USD Technical Forecast

The EUR/USD pair is trading near $1.1610, struggling to hold above immediate support after a recent pullback. The price remains below both the 50-EMA ($1.1639) and 200-EMA ($1.1673), reflecting ongoing bearish pressure. A descending trendline from recent highs continues to cap upside moves, keeping sentiment cautious.

If the pair fails to stay above $1.1595, it may test the next support at $1.1545. On the upside, a decisive close above $1.1660 could signal a short-term recovery toward $1.1710.

The RSI at 40 suggests limited buying strength, indicating the euro may stay range-bound or slightly bearish in the near term unless momentum improves.