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

Market Overview

The US Dollar Index (DXY) remained under pressure below 98.00 in early Asian trading on Wednesday, with limited signs of recovery. Expectations of a September rate cut continue to weigh on the Greenback.

According to the CME FedWatch Tool, markets assign a 93% probability of a 25-basis-point cut, up from 86% last week.

Adding to the pressure, the Bureau of Labor Statistics revised job growth figures, showing the economy created 911,000 fewer jobs in the 12 months through March than previously estimated. The weaker labor backdrop supports arguments for more accommodative Fed policy.

Traders Eye US Inflation Data for Guidance

Attention now shifts to upcoming US inflation releases. The Producer Price Index (PPI) is due Wednesday, followed by the Consumer Price Index (CPI) on Thursday. These reports are expected to provide clearer direction on whether the Fed maintains its dovish trajectory.

Political and Trade Risks Add to Dollar Volatility

The dollar also faces political headwinds after a federal judge blocked former President Donald Trump from removing Fed Governor Lisa Cook, a case raising concerns about Fed independence.

At the same time, Trump has urged the EU to impose 100% tariffs on Chinese and Indian goods, with Washington prepared to match any such move. The escalation of trade tensions adds further uncertainty to the outlook for the dollar.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading near 97.78, struggling to hold momentum after a short-lived rebound. On the 4-hour chart, price is facing resistance around 97.93, where sellers previously stepped in. The 50-EMA at 97.87 is flat, while the 200-EMA at 98.10 remains overhead, both limiting upside.

The RSI is near 41, showing weak momentum after recovering from oversold levels. A rejection from 97.93 could send price back toward 97.59, with deeper support at 97.35 and 97.10.

For bulls to regain control, DXY would need a sustained close above 98.10, which could open the way to 98.42. For now, the index remains pressured while below the 98 zone.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3533, consolidating after pulling back from its recent highs. On the 2-hour chart, price remains within a rising channel, with support at the 50-EMA around $1.3514 and stronger backing near $1.3482. Resistance levels to watch are $1.3590 and $1.3619, where price previously stalled.

The RSI at 51 reflects neutral momentum, suggesting the pair could swing either way in the short term. A bounce above $1.3560 would signal renewed bullish strength, opening the way toward $1.3619 and $1.3646.

However, a drop below $1.3510 risks breaking the channel, with downside levels at $1.3482 and $1.3448. For now, GBP/USD stays constructive while holding above $1.3510.

EUR/USD Technical Forecast

EUR/USD is trading near $1.1706, consolidating after recent swings. The pair is finding support at $1.1681, which aligns with the trendline and the 200-EMA at $1.1678. Resistance is seen at $1.1718, where sellers capped the last recovery.

The 50-EMA at $1.1712 is currently limiting upside, while the RSI at 43 signals weak momentum after sliding from overbought levels. A bounce above $1.1718 could trigger further gains toward $1.1743, and potentially $1.1779 if momentum strengthens.

On the downside, a break below $1.1680 would open the path toward $1.1658 and $1.1633. Overall, EUR/USD is stuck between key EMAs and traders should watch for a decisive move above $1.1718 or below $1.1680 to confirm direction.