US Dollar Price Forecast: Slips as Fed Rate-Cut Bets Grow – GBP/USD and EUR/USD

Market Overview

During the European session on Wednesday, the US Dollar Index (DXY), which measures the Greenback against a basket of major currencies, extended its weekly downtrend for a third straight session. The index slipped to a fresh intraday low, underscoring a fragile tone as investors remain cautious about the US policy outlook.

Rate-Cut Expectations Pressure the Dollar

The latest weakness in the DXY reflects growing conviction that the Federal Reserve may ease monetary policy further in 2026. This view persists despite strong growth data.

The US Commerce Department reported the economy expanded at a 4.3 percent annualized pace in the July–September quarter, up from 3.8 percent previously and above market expectations.

Even so, traders continue to price in at least two rate cuts next year as inflation shows signs of cooling and labor market momentum softens. These expectations have kept the dollar under steady pressure.

Policy Uncertainty Adds to Headwinds

Comments from US President Donald Trump have added another layer of uncertainty. He said any future Fed chair should be willing to lower interest rates even if economic conditions remain solid.

Such remarks have raised questions about the central bank’s longer-term policy independence, reinforcing the negative bias toward the dollar.

Thin Liquidity Keeps Markets Sensitive

Year-end liquidity conditions are also shaping price action. With thinner trading volumes, downside momentum has slowed, leaving room for short-lived rebounds.

Attention now turns to US weekly initial jobless claims later in the North American session for near-term direction. Overall, the DXY remains sensitive to shifts in Fed expectations and US political signals.

US Dollar Index (DXY) – Technical Analysis

The US Dollar Index is trading near 97.90 on the 4-hour chart, extending its decline within a well-defined descending channel that has guided price action since mid-November. Price continues to post lower highs and lower lows, confirming a bearish structure. The index remains capped below the 50-EMA near 98.50, while the 100-EMA around 99.10 reinforces overhead resistance and trend pressure.

Recent candles show shallow rebounds followed by renewed selling, suggesting corrective pullbacks rather than trend reversal. The RSI is hovering near 40, reflecting weak momentum without oversold extremes, leaving room for further downside. Immediate support sits around 97.75, with a break exposing 97.35 and potentially 97.00. A recovery above 98.70 would be needed to ease downside pressure. The trade idea is to sell rallies below 98.60, target 97.30, stop above 99.10.

GBP/USD Technical Analysis

GBP/USD is trading near 1.3515 on the 4-hour chart, holding firmly inside a rising channel that has guided price action since late November. The broader structure remains bullish, supported by a sequence of higher highs and higher lows. Price is comfortably above the 50-EMA near 1.3470, while the 100-EMA around 1.3330 continues to anchor the medium-term trend.

Recent candles show shallow pullbacks with quick recoveries, signaling steady demand rather than exhaustion. RSI is hovering around 60, reflecting healthy momentum without overbought pressure. Immediate resistance sits near 1.3550, with a breakout opening the way toward 1.3600 and 1.3650. On the downside, a drop below 1.3470 would signal short-term weakness. The trade idea is to buy pullbacks near 1.3470, target 1.3600, stop below 1.3410.

EUR/USD Technical Forecast

EUR/USD is trading near 1.1790 on the 4-hour chart, holding firmly within a rising channel that has defined the uptrend since late November. Price continues to print higher highs and higher lows, keeping the short-term structure constructive. The pair remains supported above the 50-EMA near 1.1750, while the 100-EMA around 1.1670 reinforces the broader trend floor.

Recent candles show controlled pullbacks followed by renewed buying, suggesting consolidation rather than distribution. RSI is hovering near 60, signaling steady bullish momentum without overbought conditions.

Immediate resistance sits around 1.1805, with a breakout opening the door toward 1.1850 and 1.1880. On the downside, a break below 1.1745 would weaken near-term momentum. The trade idea is to buy pullbacks near 1.1750, target 1.1860, stop below 1.1700.