US Dollar Price Forecast: Rises Ahead of NFP as Markets Eye Fed Cut, GBP/USD and EUR/USD

Market Overview

During Asian trading on Friday, the US Dollar Index (DXY) edged higher to around 98.15. Caution prevailed as markets awaited the August employment report, a release that could guide expectations for the Federal Reserve’s next move.

Dollar Gains Despite Softer Labor Data

The uptick in the DXY came even as labor market indicators weakened. Weekly jobless claims rose more than expected, while ADP data showed private-sector payrolls increased by only 54,000 in August—well below July’s revised 106,000 and the 65,000 forecast.

This softness has fueled market bets on policy easing. The CME FedWatch tool now places the probability of a September rate cut near 100%, up from 87% a week earlier.

Fed Balances Inflation and Jobs Outlook

Remarks from policymakers also shaped sentiment. New York Fed President John Williams said gradual rate cuts remain possible if economic conditions align, though he emphasized the need to balance high inflation with labor market weakness.

Chicago Fed President Austan Goolsbee noted that the job market may already be deteriorating, reinforcing expectations for a cautious Fed stance.

Nonfarm Payrolls in Focus

Attention now shifts to the August Nonfarm Payrolls report. Economists forecast 75,000 job additions with unemployment edging to 4.3%.

A weaker print could solidify expectations of a dovish Fed, while stronger numbers may ease pressure on the DXY by keeping higher rates on the table.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading around 98.13, holding just above the 200-EMA at 98.16 and the 50-EMA at 98.17, showing indecision near key moving averages. Price action has formed a narrowing structure with lower highs and higher lows, pointing to consolidation before a breakout.

Resistance levels stand at 98.43 and 98.63, while immediate support lies at 97.87 and 97.71. The RSI is at 45, indicating weakening momentum without being oversold.

A push above 98.43 could signal renewed strength toward 98.83, while a breakdown below 97.87 may trigger a deeper move lower. For now, traders are watching for a decisive move out of this consolidation range.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3454, holding just above the 50-EMA at $1.3447 and the 200-EMA at $1.3463, both acting as short-term pivots. The pair is consolidating within a broader descending triangle, with immediate resistance at $1.3489 and stronger caps at $1.3543 and $1.3594. On the downside, support rests at $1.3416, followed by $1.3376 and $1.3341.

The RSI at 56 suggests improving momentum without nearing overbought territory. A break above $1.3489 could trigger further upside, while failure to hold $1.3416 risks renewed selling.

For now, the bias is cautiously bullish as long as price remains supported above the ascending trendline from August lows.

EUR/USD Technical Forecast

EUR/USD is trading near $1.1670, holding above trendline support that has guided price higher since late August. The pair is consolidating just above the 50-EMA at $1.1659 and the 200-EMA at $1.1656, both acting as short-term pivots.

Immediate resistance lies around $1.1682, with further upside targets at $1.1708 and $1.1735. The RSI stands at 58, showing improving momentum while staying below overbought levels. A sustained close above $1.1682 could strengthen bullish sentiment, opening the door to higher levels.

On the downside, support rests at $1.1614, with $1.1578 as the next cushion. For now, the bias favors gradual upside while the trendline support remains intact.