US Dollar Price Forecast: Finds Support Before FOMC Minutes – GBP/USD and EUR/USD

Market Overview

During the early European market session, the value of the US dollar against six major currencies – tracked by the US Dollar Index (DXY) – is still steady at around the 98 level. There’s a level of uncertainty looming over the markets as we wait to see what the Federal Open Market Committee (FOMC) minutes from their December meeting are going to show. This might give us a better idea of where the Federal Reserve sees its policy heading in 2026.

Rate Expectations are Keeping the Dollar in a Bit of a Tight Spot

The dollar is getting some gentle headwinds as people keep factoring in the possibility that rates might come down a bit in the new year. There is an 83.9% chance the Fed will keep rates unchanged at its January meeting – up from 80% a week ago. After a bit of a boost last week, expectations for a 25-point cut have actually dropped to 16.1% – down from 19.9%.

The Fed actually did lower rates by 25 points back in December, taking them down to 3.5 – 3.75%. That was the final 75-point cut of the year , a move that reflected the slowing labor market and easing inflationary pressures.

Safe Haven Demand is Keeping the Dollar from Dropping too Far

When you put all that together – the shifting rate expectations and the global risk concerns – it’s no wonder the dollar is staying pretty steady. Traders are waiting for the FOMC minutes to come out to get a better idea of what the Fed is thinking, and in the meantime, safe-haven demand is keeping the dollar from falling too far.

US Dollar Index (DXY) – Technical Analysis

The US Dollar Index (DXY) is treading water around $98.03, after stumbling back from the $98.70-$98.75 high point in a pretty sudden move. Fortunately, it’s still sitting above that key 0.236 Fibonacci retracement mark at $97.98 – and just for the record, the 0.382 one just above $98.13 is a major hurdle right now.

A break above $98.25 suddenly puts us in play for $98.60, but if we slip below $97.75, we may see more selling. The trade idea is to go for long on a confirmed break above $98.25 and target $98.60, but with a stop-loss set below $97.95.

GBP/USD Technical Analysis

GBP/USD is hovering shy of the $1.3500 level on the 2-hour chart and is stuck in a tight ascending channel that’s been forming for a while. On the other hand, the price is still being supported above the rising trendline and the 50-period EMA at about $1.3480, and the 200-period EMA, which sits near $1.3400, remains higher, confirming the overall uptrend in GBP/USD.

Resistance has been bunched up around the $1.3535 and $1.3600 levels, while, on the flip side, support in price terms is standing strong around $1.3470 and $1.3410. The trade idea is to buy on a break above $1.3535, with a stop-loss just below $1.3470 and a target of $1.3600.

EUR/USD Technical Forecast

EUR/USD is trading shy of $1.1770 and for now, is consolidating within that distinctively defined uptrend channel visible on the 2-hour chart. The price remains above the upward-sloping trendline and the 50-day EMA, which are currently tracking at $1.1750.

Meanwhile, the 200-day EMA is sitting just a little lower at $1.1700 & is adding further weight to the overall bullish picture. The resistance is capped at $1.1805 & then $1.1850, whereas support sits at $1.1705 and $1.1665.

The RSI (Relative Strength Index) is currently around the 50 level, suggesting fairly neutral momentum following the recent upward push. The trade idea is to buy the pair when it clearly breaks and takes out $1.1805, then target $1.1850, and set a stop loss below $1.1750.