US Dollar Price Forecast: Gains on Strong GDP and FOMC Hold – GBP/USD and EUR/USD

Market Overview

Wednesday delivered a mixed batch of U.S. economic data. The ADP Non-Farm Employment Change showed stronger-than-expected job creation at 104K, beating the forecast of 77K. This suggests ongoing resilience in the labor market despite broader concerns.

Meanwhile, the Advance GDP print surprised to the upside at 3.0%, outperforming the expected 2.5%, a positive sign for economic momentum. However, the GDP Price Index came in slightly softer at 2.0% versus the 2.2% forecast, pointing to modest easing in inflationary pressure.

Housing data showed a slowdown, with Pending Home Sales falling 0.8% month-over-month, reversing a 1.8% gain in the prior reading. Later in the day, the Federal Reserve held interest rates steady at 4.50% as expected. In the FOMC press conference, Chair Jerome Powell offered little forward guidance, maintaining a cautious stance as inflation remains uneven and labor indicators are still adjusting.

Markets also digested comments from former President Donald Trump, who reiterated his hawkish trade stance in a speech that added uncertainty heading into the final trading sessions of July.

What to Watch: July 31 Data

Thursday’s key data releases include the Core PCE Price Index, expected at 0.3% month-over-month, and the Employment Cost Index, forecast at 0.8%.

Weekly jobless claims are also due, with analysts expecting a slight uptick to 222K from 217K. These figures could help shape expectations ahead of Friday’s more influential jobs report.

Eyes on Friday: August 1 Highlights

Friday brings several high-impact releases. Non-Farm Payrolls are expected to show a slowdown, with a forecast of 106K compared to the previous 147K. The unemployment rate is projected to tick up to 4.2% from 4.1%.

Average hourly earnings are forecast to rise 0.3%, which may feed into inflation expectations.

Meanwhile, ISM Manufacturing PMI is set to print at 49.5, indicating continued contraction. Markets will also watch for an upward revision in the University of Michigan Consumer Sentiment Index, now forecast at 70.0 from a prior 61.8.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) surged above a key descending trendline and horizontal resistance at 99.09, confirming a bullish breakout from the wedge formation. Price reached as high as 99.98 before facing minor rejection, now consolidating just below the psychological 100 level.

The move was supported by a strong bullish momentum and alignment of the 50-EMA ($98.396) and 100-EMA ($98.159) as dynamic support. A sustained hold above 99.09 keeps the bullish structure intact, with next resistance seen at 100.55 and 101.27.

However, short-term overextension could prompt a pullback to retest 98.51 or the breakout zone. A break back below 98.51 would invalidate the breakout and shift momentum back to neutral.

GBP/USD Technical Analysis

GBP/USD remains under pressure within a descending channel on the 4-hour chart, trading near 1.3256. Price action recently bounced off support at 1.3223 and is attempting to stabilize, but the bias stays bearish below the 50-EMA at 1.3405 and the 100-EMA at 1.3454.

A break above 1.3306 is needed to challenge the upper boundary of the channel and test 1.3386 next.

On the downside, a move below 1.3223 could expose 1.3174 and then 1.3125. Momentum is weak, and sellers continue to dominate unless bulls reclaim territory above 1.3386.

EUR/USD Technical Forecast

EUR/USD has broken decisively below the rising trendline and 50-day EMA at 1.1547, confirming bearish momentum. Price is now testing support near 1.1435, just above the 100-day EMA at 1.1362. A daily close below 1.1362 could extend the downtrend toward the next key level at 1.1208.

The recent rejection from the 1.1824 swing high has turned into a sharp reversal, suggesting the dollar’s strength is dominating post-FOMC. Any recovery faces resistance at 1.1558.