US Dollar Forecast: Consumer Sentiment Eyed; GBP/USD and EUR/USD Outlook

US Dollar Index Reacts; Consumer Sentiment Index Ahead

The US Dollar Index saw fluctuations on Thursday following the release of mixed economic data. Core Producer Price Index (PPI) rose by 0.3%, exceeding forecasts of 0.2%, while the general PPI climbed to 0.2%, just above expectations.

Unemployment claims came in slightly higher at 230K compared to the anticipated 227K. Investors are now awaiting key reports on Friday, including the University of Michigan’s Consumer Sentiment Index, forecasted at 68.3, and inflation expectations at 2.8%, which could further influence the US dollar’s movement.

US Dollar Index (DXY) – Technical Analysis 

The Dollar Index (DXY) is trading at $101.147, down 0.20%, reflecting a minor pullback. The pivot point at $101.370 is a key level to watch. If the index holds above this level, we may see renewed bullish momentum, with immediate resistance at $101.637, followed by $101.849.

However, a break below $101.370 could trigger further downside pressure, with support levels at $101.063 and $100.857. The 50-day EMA at $101.460 acts as a short-term resistance, while the 200-day EMA at $102.122 signals a more significant barrier.

Currently, the Dollar Index remains in a consolidative phase, and a break of these key levels will determine the next directional move.

Sterling Awaits Key Inflation Expectations Data

The British Pound is in focus as investors await the Consumer Inflation Expectations report, scheduled for Friday at 8:30 AM. The forecast is set at 2.8%, and the data could influence the Bank of England’s future monetary policy decisions, potentially impacting the pound’s value against major currencies.

GBP/USD Technical Forecast

The GBP/USD is trading at $1.31297, up 0.18%, but facing a key pivot point at $1.3150. A break above this level could lead to further bullish momentum, with resistance levels at $1.3185 and $1.3216.

On the downside, immediate support lies at $1.3085, followed by $1.3044. The 50-day EMA at $1.3104 provides short-term support, while the 200-day EMA at $1.3023 offers a more significant base. If GBP/USD fails to hold above $1.3150, we could see a bearish shift, with prices possibly testing lower support levels.

For now, the pair is in a consolidation phase, waiting for clearer direction from economic data or market catalysts.

Euro Faces Pressure Amid ECB Decision

The Euro (EUR) faces renewed pressure following the European Central Bank’s (ECB) decision to maintain its Main Refinancing Rate at 3.65%, as widely expected. However, the French Final CPI released earlier showed a slight miss, reinforcing concerns over inflation dynamics.

Meanwhile, industrial production data, due later today, is expected to decline by -0.6%, further weighing on economic sentiment.

Traders will also focus on the ECOFIN and Eurogroup meetings for policy insights. The outlook for the Euro remains uncertain, with any surprises in the upcoming data or statements likely to impact the currency’s short-term trajectory.

EUR/USD Technical Forecast

The EUR/USD is trading at $1.10775, up 0.11%, but facing resistance near $1.10910, a crucial pivot point. If the pair breaks above this level, we could see more bullish momentum toward the next resistance at $1.11201 and beyond.

However, if it fails to breach $1.10910, the pair may retrace toward immediate support at $1.10492, followed by $1.10257. The 50-day EMA at $1.10572 is offering short-term support, while the 200-day EMA at $1.10197 provides a strong base. A break below these levels could lead to a bearish trend.