US Dollar Price Forecast: Safe-Haven Demand vs. Fed Easing Risks, GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) hovered around 98.40 during early Asian trading on Wednesday, supported by safe-haven flows as investors sought stability ahead of key US economic data. The cautious tone across markets, shaped by ongoing geopolitical tensions, kept demand for the greenback intact before the JOLTS Job Openings release and the Federal Reserve’s Beige Book.

Fed Rate Cut Expectations Pressure the Dollar

Despite safe-haven demand, downside risks remain as markets increasingly expect the Fed to cut rates in September. Dovish remarks from Fed officials have reinforced this view. According to the CME FedWatch Tool, the probability of a 25-basis-point cut has risen to 91%, up from 85% a week earlier.

The case for easing strengthened after July’s Nonfarm Payrolls report showed weaker-than-expected job creation.

Traders now await Friday’s August NFP, forecast at just 75,000 new jobs and an unemployment rate of 4.3%. Signs of labor market weakness could further pressure the Fed to act.

Trade Policy Adds to Uncertainty

Trade risks are also weighing on sentiment. A US Court of Appeals ruling against tariffs imposed under the previous administration has reignited questions about trade stability. With potential legal challenges ahead, uncertainty in trade policy could limit the dollar’s upside in the near term.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is consolidating around 98.33 after facing resistance near 98.51. The chart shows a descending triangle, with lower highs forming while support holds near 98.11. Both the 50-EMA at 98.17 and the 200-EMA at 98.10 are aligning closely, highlighting this zone as a critical pivot.

RSI sits near 52, showing neutral momentum but leaning slightly lower, while MACD signals remain muted, suggesting indecision. If DXY breaks below 98.11, the next target could be 97.87, with deeper support at 97.54.

On the upside, reclaiming 98.51 would shift focus toward 98.83. For now, the structure favors sideways movement, with traders watching for a breakout confirmation.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3380 after bouncing from support at $1.3331. The chart shows a recent breakdown below the long-term trendline and both EMAs, with the 50-EMA at $1.3429 and 200-EMA at $1.3470 now acting as resistance.

Momentum indicators are subdued, with the RSI around 42, signaling weak buying pressure after an oversold recovery. If the pair fails to reclaim $1.3446, sellers may aim for $1.3331 and deeper toward $1.3280.

On the upside, a move above $1.3446 could open the path back to $1.3489. For now, bias leans bearish while below the EMAs, though short-term rebounds may continue if buyers hold above $1.3331.

EUR/USD Technical Forecast

The EUR/USD is trading near $1.1647 after bouncing from support at $1.1622. The chart shows a rising trendline from late August, highlighting steady higher lows. Both the 50-EMA at $1.1658 and the 200-EMA at $1.1662 sit just above, creating a key resistance cluster that buyers need to clear for momentum to extend.

The RSI is near 50, signaling balanced momentum after a recovery from oversold territory. If price holds above $1.1622, a push toward $1.1680 looks likely, with further resistance at $1.1735.

On the downside, a break below $1.1622 could trigger weakness toward $1.1577. For now, EUR/USD remains range-bound but leaning slightly bullish as long as the trendline support holds.