US Dollar Forecast: DXY Faces Bearish Pressure as Bond Yields Hold – GBP/USD Outlook

Market Overview

The U.S. dollar remains steady following recent economic data, with unemployment claims slightly exceeding forecasts at 223K, compared to the expected 221K, indicating resilience in the labor market. Meanwhile, the U.S. 10-year Treasury yield hovers around 4.62% as investors look ahead to key data releases.

The upcoming Flash Manufacturing PMI, projected at 49.8, suggests a potential modest recovery, while the Flash Services PMI (expected at 56.4) and Existing Home Sales (forecasted at 4.19M) could offer further insights into economic momentum. Inflation expectations remain at 3.3%, adding to market uncertainty regarding future Fed policy.

Investors are closely watching these indicators to assess potential shifts in monetary policy and the broader economic outlook.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at $107.704, down 0.38%, as it struggles to hold above key technical levels. The index remains under pressure after breaking below the pivot point at $107.889, signaling a bearish outlook.

Immediate support is seen at $107.180, and a further decline could push the index towards the next key level at $106.484. The 50-day EMA at $108.585 and the 200-day EMA at $108.049 indicate strong overhead resistance, with bullish momentum only regaining traction if prices move above $107.889.

A downward trendline breakout suggests the potential for further downside pressure, keeping sentiment cautious as traders monitor economic data and Federal Reserve policy cues.

US 10-year Bond Yields

The U.S. 10-year Treasury yield is currently at 4.625%, testing resistance near the 50-day EMA at 4.634%, after rebounding from the 4.506% support level. The recent uptick suggests rising expectations of a hawkish Fed stance, which could support the U.S. dollar index (DXY).

Higher yields make U.S. assets more attractive, strengthening the dollar and potentially pressuring risk assets such as equities and commodities. However, if yields retreat below the key 4.593% support, it may signal dovish sentiment, weakening the dollar and boosting gold. Traders should monitor inflation data and Fed policy cues for further direction.

GBP/USD Technical Analysis

GBP/USD is showing resilience, currently trading at $1.24093, up 0.47%, as it continues to climb above key support levels. The pair is holding above the pivot point at $1.23459, signaling bullish momentum, with immediate resistance at $1.24900.

A break above this level could pave the way for further gains toward the next resistance at $1.26048. The 50-day EMA, positioned at $1.23030, offers near-term support, while the 200-day EMA at $1.24416 poses a critical level for sustained upside.

A bullish breakout above the downward trend suggests buying interest above $1.23459, while failure to hold could drive a sharp selling trend.