US Dollar Price Forecast: Shutdown and PMI in Focus for GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) extended its decline in Asian trading Friday, hovering near 97.85. The drop comes against the backdrop of a partial government shutdown, weaker labor data, and rising expectations for further Federal Reserve rate cuts.

Traders now look to the ISM Services PMI and Fed commentary for fresh direction.

Government Deadlock Adds to Market Uncertainty

The shutdown, entering its third day after lawmakers failed to pass a funding bill, has already delayed key economic releases, including the September Nonfarm Payrolls.

With no weekend session scheduled and further gridlock expected, the lack of clarity on fiscal policy and economic data is weighing on sentiment, keeping the dollar under pressure.

Weak Jobs Data Fuels Rate Cut Bets

Fresh signs of labor market weakness added to the dollar’s woes. The ADP report showed private-sector payrolls fell by 32,000 in September, after a revised 3,000 drop in August, well below forecasts for a 50,000 gain.

According to CME FedWatch, traders now see near-certain odds of a 25 basis-point cut in October and another in December.

Fed Comments and PMI in Focus

Fed officials remain cautious. Dallas Fed President Lorie Logan said the September cut was justified but warned against rushing further easing. Stronger PMI readings later Friday could offer temporary relief, but the broader outlook for the dollar remains bearish amid policy uncertainty and labor market concerns.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading at 97.85, struggling to hold above the 98.00 mark after rejecting near short-term resistance. Price has slipped below both the 50-EMA (97.81) and 200-EMA (97.74), signaling a loss of momentum. The recent break from the rising channel further highlights weakening bullish control.

On the downside, the next supports stand at 97.20 and 96.83, with deeper risk toward 96.23 if selling pressure continues. RSI at 47 sits in neutral territory, suggesting consolidation but leaning bearish.

For traders, a confirmed close below 97.20 could trigger more downside, while only a sustained push above 98.05 would shift the bias back toward buyers.

GBP/USD Technical Analysis

The GBP/USD is consolidating near $1.3462, trading within a symmetrical triangle that signals indecision. The 50-EMA ($1.3452) and 200-EMA ($1.3478) are acting as dynamic resistance, capping upside momentum. Price has been oscillating around the $1.3440–$1.3470 range, making this a key decision zone.

A breakout above $1.3510 could confirm bullish momentum, opening the path toward $1.3537 and $1.3590. On the downside, failure to hold above $1.3430 risks declines toward $1.3386 and $1.3328.

The RSI at 52 suggests neutral momentum with a slight bullish tilt. For now, traders should watch the triangle breakout, as it will likely dictate whether the next move is toward $1.3530+ or a deeper pullback below $1.34.

EUR/USD Technical Forecast

The EUR/USD is holding steady near $1.1736, supported by an ascending trendline from late September. Both the 50-EMA ($1.1731) and 200-EMA ($1.1735) are aligned, creating a strong base around the current zone. Price has repeatedly tested the $1.1710–$1.1720 support band, making it a key level for buyers.

A sustained bounce could lift the pair toward $1.1810, with further upside potential toward $1.1870 if momentum builds. On the downside, a close below $1.1710 risks deeper losses toward $1.1660.

The RSI at 53 suggests neutral momentum but slightly favors buyers. For now, the bias remains constructive while above the trendline support, with $1.1810 acting as the first major hurdle for bulls.