US Dollar Forecast: Chicago PMI Drives Caution, Gold, GBP/USD, and EUR/USD Outlook

Market Overview

The US Dollar Index (DXY) is trading near the 108.00 level, maintaining stability amid thin year-end market activity. Traders remain cautious as incoming economic data from China and Japan point to industrial slowdowns, yet the Greenback shows resilience.

With the 10-year Treasury yield nearing 4.60%, the Dollar continues to benefit from higher yields and robust growth prospects. Markets are also pricing in limited rate cuts for 2025, aligning with cautious signals from Fed Chair Jerome Powell.

Despite global stimulus measures, the Dollar remains broadly strong, eyeing a nearly 7% annual gain. Upcoming Chicago PMI data may provide further direction.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at $108.014, holding steady with no significant change. The pivot point at $107.899 serves as a key level to watch—remaining above this signals a bullish bias. Immediate resistance is at $108.541, with the next target at $108.901 if upward momentum persists.

On the downside, support sits at $107.580, followed by $106.971. The index is trading just above the 50 EMA ($108.028) and well above the 200 EMA ($107.369), reflecting short-term strength within a broader uptrend.

The 4-hour chart shows an upward channel, suggesting continued buying pressure. A break below $107.899 could disrupt the bullish outlook, making this a pivotal level for traders to monitor closely in the coming sessions.

GOLD Technical Analysis

Gold (XAU/USD) trades at $2,616.97, down 0.14%, reflecting bearish sentiment below the pivot at $2,626.82. Key support lies at $2,608.24 and $2,587.87, while resistance levels are at $2,639.53 and $2,658.47.

A symmetrical triangle pattern signals potential breakout, but a bearish engulfing candle suggests near-term downside.

Gold remains below the 50 EMA ($2,624.02) and 200 EMA ($2,637.10), reinforcing a bearish outlook unless prices reclaim $2,626.82.

GBP/USD Technical Analysis

GBP/USD is trading at $1.25739, up 0.03%, showing mild bullish momentum just below the pivot point at $1.25891. Immediate resistance is at $1.26616, with the next level at $1.27251 if bullish sentiment strengthens.

On the downside, support lies at $1.25037, with additional protection at $1.24395. The pair trades above the 50 EMA ($1.25554) but remains below the 200 EMA ($1.26209), signaling mixed momentum.

A symmetrical triangle pattern reflects ongoing consolidation, keeping the pair in a sideways range. A break above the pivot could signal bullish momentum, while a move below $1.25891 may drive selling pressure.

EUR/USD Technical Forecast

EUR/USD is trading at $1.04236, up 0.03%, reflecting mild bullish momentum above the pivot point at $1.04139. Immediate resistance is at $1.04481, with further targets at $1.04945 if buyers maintain control. On the downside, support is at $1.03841 and $1.03454, which could come into play if the pivot breaks.

The pair is slightly above the 50 EMA ($1.04169), but remains below the 200 EMA ($1.04633), signaling a cautious outlook. The upward trendline supports a buying bias, but traders should monitor a break below $1.04139, which could trigger sharper declines.