US Dollar Price Forecast: Fed’s 25bps Cut Shifts Focus to ECB Policy – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) is trading around $99.13, holding steady after Wednesday’s volatile session driven by the Federal Reserve’s rate decision. The Fed cut the Federal Funds Rate from 4.25% to 4.00%, in line with expectations, marking its second rate cut this year.

Chair Jerome Powell’s cautious tone signaled data dependency moving forward, softening market bets for another cut in December. Meanwhile, the latest Pending Home Sales data showed 0.0% growth, missing forecasts of 1.6% and highlighting persistent weakness in the U.S. housing market.

Key European Data in Focus

Attention now shifts to Europe, where a flurry of key releases is shaping sentiment. Germany’s Preliminary GDP came in flat at 0.0%, compared to the previous -0.3%, suggesting stabilization but limited momentum.

The German Prelim CPI held steady at 0.2%, while Spanish Flash CPI eased to 2.9%, slightly below the prior 3.0%.

ECB Policy and CPI Outlook

The European Central Bank is expected to maintain its Main Refinancing Rate at 2.15%, with markets awaiting signals from President Christine Lagarde’s press conference for clues on future easing.

On Friday, the Eurozone’s Core CPI Flash Estimate is forecast at 2.3%, just below the 2.4% prior reading, while overall CPI may slow to 2.1% from 2.2%, reflecting moderating inflation across the bloc.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading around 99.13, testing resistance near 99.21 after rebounding from the 98.80 support zone. The index remains above both the 50-period EMA at 98.89 and the 200-period EMA at 98.71, signaling mild bullish momentum.

RSI is holding near 59, suggesting steady buying interest without overbought pressure. A sustained move above 99.21 could open the way toward 99.47 and 99.78, while a drop below 98.90 might push the index back toward 98.56 support.

GBP/USD Technical Analysis

The GBP/USD pair is trading near $1.3200, struggling to recover after hitting a fresh weekly low. The 50-period EMA at $1.3307 and the 200-EMA at $1.3391 continue to cap upside momentum, reinforcing the prevailing downtrend. RSI sits around 34, indicating weak bullish pressure and limited buying interest.

Immediate resistance is seen near $1.3248, while support levels lie at $1.3141 and $1.3080. A break below $1.3140 could accelerate bearish momentum toward $1.3020, while a rebound above $1.3250 might signal early corrective recovery.

Overall, the pair remains bearish unless it reclaims the $1.33 area, which aligns with the short-term moving averages.

EUR/USD Technical Forecast

The EUR/USD pair is trading near $1.1618, struggling to gain momentum below the descending trendline resistance at $1.1640. The 50-period EMA sits around $1.1620, while the 200-EMA near $1.1642 keeps upside attempts in check.

RSI hovers around 45, showing weak momentum and limited buying pressure.

If the pair breaks above $1.1640, it could test $1.1680 and $1.1712. However, failure to clear this barrier may lead to renewed pressure toward $1.1580 and $1.1545.