US Dollar Price Forecast: Slides as US CPI Misses Forecasts – GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) is trading near 98.6, stabilizing after a volatile session driven by softer-than-expected inflation data. The greenback initially weakened as traders reassessed the Federal Reserve’s policy path, before finding support as broader risk sentiment remained cautious.

Treasury yields eased modestly, reflecting growing confidence that inflation pressures are cooling faster than previously assumed.

Yesterday’s Events Reset the Narrative

Thursday’s data flow was decisive for dollar positioning. US CPI eased to 2.7% year-on-year, undershooting the 3.1% forecast and coming in below the 3.0% prior reading. Core inflation also cooled to 2.6%, reinforcing the disinflation trend.

Labor market signals were mixed but broadly stable, with initial jobless claims at 224K, unchanged from expectations and lower than the prior 237K, suggesting no abrupt deterioration in employment conditions.

However, the Philadelphia Fed Manufacturing Index collapsed to -10.2, a sharp miss versus the 2.5 forecast, reviving concerns about regional manufacturing momentum. Together, the data reduced near-term dollar upside by strengthening expectations that policy will remain restrictive but increasingly flexible later in the cycle.

Today’s Events: What Markets Are Watching

Friday’s focus shifts to demand and confidence indicators. Existing home sales are forecast at 4.15 mn, slightly above the 4.10 mn prior, offering insight into housing resilience under tight financial conditions.

Meanwhile, revised University of Michigan consumer sentiment is expected to tick up to 53.5 from 53.3, a modest improvement that could temper downside pressure on the dollar if confirmed.

Overall, the dollar’s direction hinges on whether today’s data validates yesterday’s softer macro signal or restores confidence in US growth momentum.

US Dollar Index (DXY) – Technical Analysis

The US Dollar Index is trading near 98.58, holding inside a well-defined descending channel on the 4-hour chart. Recent candles show smaller bodies with long wicks, pointing to selling pressure easing, but no confirmed trend reversal yet.

Price remains capped below the 50-EMA near 98.96 and the 100-EMA around 99.28, keeping the broader bias tilted lower. The channel midline continues to act as resistance, limiting rebound attempts. Immediate support sits near 98.17, followed by 97.87, which aligns with the lower channel boundary.

RSI has rebounded toward 55, reflecting improving momentum but still below bullish territory. Trade idea is sell rallies below 99.00, targeting 98.00, stop above 99.40.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3377, consolidating inside a rising channel on the 4-hour chart after repeated failures to break higher. Price is holding close to the 50-EMA, while the 100-EMA near $1.3287 continues to slope upward, keeping the broader trend constructive.

Recent candles show mixed bodies with long wicks, pointing to two-sided flows and fading momentum rather than a trend reversal. Channel support sits near $1.3340, followed by $1.3285, which aligns with prior structure and dynamic support.

On the upside, $1.3445 remains immediate resistance, with a stronger cap near $1.3499. RSI is drifting toward 45, signaling cooling momentum without oversold conditions. Trade idea is to buy dips near $1.3340, target $1.3445, stop below $1.3280.

EUR/USD Technical Forecast

EUR/USD is trading near $1.1714, consolidating inside a rising channel on the 4-hour chart after failing to extend gains above recent highs. Price is hovering around the 50-EMA, while the 100-EMA near $1.1647 continues to slope higher, keeping the broader structure constructive despite the pause.

Recent candles show overlapping bodies and upper wicks, signaling loss of upside momentum rather than aggressive selling. Channel support comes in around $1.1680, followed by $1.1645, which aligns with prior structure.

On the upside, $1.1760 remains the first resistance, with stronger selling interest near $1.1805. RSI has slipped toward 45, reflecting cooling momentum but not a breakdown. Trade idea is to buy dips near $1.1680, target $1.1760, stop below $1.1640.