US Dollar Forecast: Awaiting Unemployment Claims Impact, GBP/USD and EUR/USD Outlook

Market Overview

The US Dollar Index (DXY) remained volatile on Wednesday as markets reacted to President Trump’s announcement of new tariffs on cars, semiconductors, chips, pharmaceuticals, and possibly lumber. This move heightened fears of a trade war, influencing investor sentiment. The DXY hovered around 106.973, just below the key resistance level of 107.316, signaling cautious optimism.

Meanwhile, mixed economic data kept the USD on its toes. Building permits met expectations at 1.48M, but housing starts fell to 1.37M, below the forecast of 1.39M. Investors are also digesting the latest FOMC minutes, which maintained a hawkish stance on interest rates. Fed officials signaled caution over inflation, limiting the USD’s gains.

Looking ahead, Thursday’s data, including unemployment claims (forecast at 215K) and the Philly Fed Manufacturing Index, could further impact the Dollar. Traders are also eyeing upcoming speeches from key FOMC members, which may provide clues on future monetary policy direction.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at 106.973, hovering just below the pivot point at 107.316, which serves as a crucial resistance level. A break above this point could shift momentum to the upside, targeting the next resistance at 107.787, and potentially 108.428 if buying pressure continues.

However, as long as DXY remains below 107.316, the bias leans bearish, especially with a downward trendline still in play.

Immediate support is at 106.555, followed by a stronger floor at 106.194. If DXY breaks below these levels, it could trigger a selling wave. The 50-day EMA at 107.293 and the 200-day EMA at 107.771 are reinforcing resistance, suggesting that the path of least resistance is downward unless a breakout occurs.

GBP/USD Technical Analysis

GBP/USD is trading at 1.25984, showing a slight decline but staying above the key pivot point at 1.25648. This level acts as crucial support, and as long as prices remain above it, the bullish outlook remains intact. Interestingly, a double-bottom pattern is forming, indicating a potential reversal from recent lows.

Immediate resistance is at 1.26398, with a breakout above this level paving the way for further gains toward 1.27278. Conversely, a break below 1.25648 could trigger selling pressure, targeting the next support at 1.24898.

The 50-day EMA at 1.25420 and the 200-day EMA at 1.24750 are providing strong support, reinforcing the bullish trend. As long as GBP/USD stays above these EMAs, upward momentum is likely to continue.

EUR/USD Technical Forecast

EUR/USD is trading at 1.04317, showing a slight uptick as it hovers above the pivotal level of 1.04236. This pivot point serves as crucial support, and as long as prices remain above it, the pair maintains a bullish bias. The upward trendline is providing strong support, reinforcing the positive sentiment.

Immediate resistance lies at 1.05091, with the next target at 1.05700. A breakout above these levels could attract more buying interest, pushing the pair higher. Conversely, a break below 1.04236 could trigger a sharper decline, with support seen at 1.03719.

The 50-day EMA at 1.04244 and the 200-day EMA at 1.04052 are aligning closely, suggesting stability and continued bullish momentum as long as the pair stays above these averages.