US Dollar Price Forecast: Gains as Hot PPI Data Lifts DXY, GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) traded near 98.30 in Asian markets on Wednesday, supported by reduced expectations for aggressive Federal Reserve easing. Stronger-than-expected July Producer Price Index (PPI) data tempered the dovish sentiment that followed a weak jobs report and softer inflation figures earlier this month.

PPI Surprise Shifts Market Pricing

US wholesale inflation data came in hotter than anticipated, prompting traders to scale back bets on deeper rate cuts. Fed fund futures now imply an 86% probability of a September cut, down from complete certainty last week. By year-end, markets are pricing in roughly 54 basis points of easing, according to the CME FedWatch tool.

Housing Data Sends Mixed Signals

The Commerce Department reported that July Housing Starts rose 5.2% to 1.428 million, reflecting stronger construction activity. However, Building Permits declined 2.8% to 1.354 million, pointing to weaker future demand. The divergence highlights ongoing uncertainty in the US housing sector.

Key Policy Events Ahead

Markets are now turning to the release of July FOMC meeting minutes later today and the Jackson Hole Symposium on Friday. Fed Chair Jerome Powell’s remarks will be closely watched for guidance.

A firm pushback against rate cut expectations could lift the dollar further, while dovish signals may trigger short-term weakness.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is consolidating just below the $98.65 resistance, with price capped by a descending trendline from late July highs. The index has found support at $97.90 and is holding above the 50- and 100-period EMAs near $98.20, signaling near-term bullish momentum.

RSI at 58 suggests moderate strength, though not yet overbought. A breakout above $98.65 could expose the $99.00–$99.30 zone, while rejection at this level risks a pullback toward $97.90 and $97.50.

GBP/USD Technical Analysis

The GBP/USD pair is trading around $1.3500, holding within a rising channel structure. After a pullback from $1.3590 resistance, price found support near $1.3450 and bounced higher. The 50- and 100-period EMAs around $1.3510 are acting as immediate resistance, and a clear break above could trigger fresh buying momentum.

RSI has rebounded from oversold territory, now at 48, signaling potential recovery. Key support lies at $1.3450 and $1.3400, while upside targets remain at $1.3590 and $1.3650.

As long as GBP/USD stays within the ascending channel, bias leans bullish, though failure to hold above $1.3450 could shift focus toward $1.3340 support.

EUR/USD Technical Forecast

The EUR/USD pair is consolidating around $1.1640 after breaking below its ascending trendline, signaling weakening bullish momentum. The pair trades under the 50- and 100-period EMAs near $1.1660, reinforcing downside pressure. RSI at 42 points to bearish bias, though not yet oversold.

A sustained move below $1.1620 could open the door toward $1.1590 and $1.1530, while recovery above $1.1660 may shift focus back to $1.1725. The broader structure shows a descending trendline from late July highs, keeping rallies capped.

Unless buyers reclaim $1.1700, EUR/USD risks further corrective pressure, with upcoming U.S. data releases likely to dictate near-term direction.