US Dollar Forecast: Can CPI Data Fuel a DXY Rally? – GBP/USD and EUR/USD Outlook

Market Overview

The US dollar remains firm following Federal Reserve Chair Jerome Powell’s testimony, where he emphasized that while rate cuts are on the horizon, they are unlikely before mid-2025. Powell reinforced that the Fed remains data-dependent, with inflation still “somewhat elevated” but not requiring immediate policy adjustments.

The market had anticipated a more dovish stance, but Powell’s remarks suggested that two rate cuts in the second half of 2025 remain the most probable course. Strong labor market conditions and steady economic activity support this view, with the Fed preferring to gradually reduce policy restraint rather than rush into easing.

Looking ahead, US inflation data set for release on February 12 will be pivotal. Higher-than-expected CPI figures could strengthen the dollar, delaying rate cuts further, while softer inflation could open the door for a more accommodative stance.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at $108.060, down 0.01%, as it hovers near the $108.048 pivot point, a critical level determining the near-term trend. The upward trendline continues to provide support above $108, reinforcing the bullish outlook.

Technical indicators suggest mixed momentum. The 50-day EMA at $108.109 and the 200-day EMA at $108.186 indicate a tight consolidation phase. Immediate resistance is seen at $108.349, with further upside potential toward $108.650 if buyers gain control.

However, a break below $108.048 could shift sentiment bearish, exposing $107.666 and $107.306 as key support levels. Traders should watch for a sustained move above $108.349 for confirmation of further strength, while a break below $108.048 could trigger selling pressure.

GBP/USD Technical Analysis

The GBP/USD pair is trading around $1.24449, up 0.02%, but remains under pressure as the downward trendline continues to act as resistance. The pivot point at $1.24602 is a critical level—staying below it keeps the bearish bias intact, while a break above could shift sentiment toward a bullish outlook.

The 50-day EMA at $1.24148 and 200-day EMA at $1.24067 suggest that buyers are trying to hold ground, but the pair struggles to gain upside traction. Immediate resistance stands at $1.25355, with a stronger barrier at $1.26126.

On the downside, support is seen at $1.23878, followed by $1.23327. A move below $1.24602 could extend selling pressure, targeting $1.23878, while a breakout above resistance may open the door for further gains.

EUR/USD Technical Forecast

The EUR/USD pair is hovering around $1.03590, edging up 0.02%, but struggling to gain momentum as the downward trendline keeps selling pressure intact. The pivot point at $1.03657 remains a crucial level—staying below it sustains a bearish outlook, while a breakout above could shift sentiment toward a more bullish stance.

The 50-day EMA at $1.03430 suggests near-term support, while the 200-day EMA at $1.03636 reinforces resistance, keeping gains in check. Immediate resistance stands at $1.04096, with further hurdles at $1.04668.

On the downside, support is seen at $1.02829, followed by $1.02117. A break below $1.03657 could accelerate losses, targeting $1.02829, while a move above resistance could spark fresh buying momentum.