US Dollar Price Forecast: Stabilises After NFP, CPI Focus – GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) is trading near 98.40, stabilising after recent losses as markets digest a heavy run of macro data and reassess the near-term policy outlook. While the dollar found modest support from selective strength in US activity data, the broader tone remains cautious amid signs of slowing momentum in the labor market and easing inflation pressures.

Yesterday’s Data: Mixed Signals for the Dollar

Tuesday’s releases delivered a mixed picture. US Non-Farm Payrolls rose by 64K, beating expectations of 51K and reversing October’s sharp decline. However, the unemployment rate climbed to 4.6%, its highest level in over a year, while average hourly earnings rose just 0.1% m/m, undershooting forecasts and pointing to cooling wage pressures.

At the same time, retail sales were flat, missing expectations and reinforcing concerns that consumer demand is losing steam. Flash PMIs added to the cautious tone, with manufacturing easing to 51.8 and services slipping to 52.9, both below prior readings.

Together, the data supported the view that growth is slowing without tipping into contraction, limiting upside for the dollar.

Events Today: Forecast vs Previous

Attention now shifts to fresh catalysts. Markets are watching UK CPI, forecast at 3.5% y/y versus 3.6% previously, which could influence sterling and spill over into broader dollar flows. In the euro area, the German Ifo Business Climate is expected at 88.2, marginally above the prior 88.1, offering insight into regional sentiment.

Later, comments from FOMC member Christopher Waller will be closely parsed for guidance on rate expectations. With markets already pricing a high probability of steady rates at the next Fed meeting, any shift in tone could drive short-term volatility in the dollar.

US Dollar Index (DXY) – Technical Analysis

The US Dollar Index (DXY) is trading near 98.40 on the 2-hour chart after bouncing from the lower boundary of a descending channel that has been in place since late November. Recent candlesticks show long lower wicks near 97.85, indicating buying interest emerging at channel support, though upside momentum remains limited.

Price is still capped below the 50-EMA near 98.70 and the 100-EMA around 99.30, keeping the broader structure tilted lower. Immediate resistance stands at 98.85, followed by 99.28, where prior support and the channel top converge. A sustained break above this zone would be needed to signal trend improvement.

On the downside, support holds at 97.85, then 97.50. RSI has rebounded toward 50, showing stabilising momentum but no clear bullish shift yet.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3390 on the 2-hour chart after pulling back from recent highs, but price action remains contained within a well-defined ascending channel that has guided the pair higher since late November. Recent candlesticks show upper wicks near $1.3450, signaling supply emerging at the upper channel boundary rather than a sharp reversal.

The pair continues to hold above the 50-EMA near $1.3360, while the 100-EMA around $1.3280 is trending higher, preserving the broader bullish structure. Immediate resistance is seen at $1.3450, followed by $1.3510, where the channel top and prior highs align. A sustained break above this zone would signal trend continuation.

On the downside, support rests at $1.3360, then $1.3280, which coincides with the lower channel boundary. RSI is holding near 55, indicating steady momentum without overextended conditions.

EUR/USD Technical Forecast

EUR/USD is trading near $1.1730 on the 2-hour chart after pulling back from recent highs, with price consolidating above a rising trendline drawn from late November. Recent candlesticks show smaller bodies and upper wicks near $1.1760, signaling hesitation from buyers after the latest push higher.

The pair remains supported above the 50-EMA near $1.1720, while the 100-EMA around $1.1655 continues to slope upward, keeping the broader structure constructive. Immediate resistance sits at $1.1760, followed by $1.1795. A break above this zone would confirm trend continuation.

On the downside, support is seen at $1.1720, then $1.1685, where horizontal support aligns with the trendline. RSI has eased toward 52, pointing to cooling momentum but no clear bearish signal yet.