US Dollar Forecast: DXY Gains Amid Fed Rate Cut Speculation, Gold, GBP/USD, and EUR/USD Outlook

US Dollar Gains as Fed Signals Slower Rate Cuts

The US dollar strengthened after Federal Reserve Governor Christopher Waller hinted at more measured interest rate cuts moving forward. Gold, a non-yielding asset, remains under pressure due to the dollar’s strength. Waller’s comments, coupled with mixed economic data, suggest gradual rate reductions.

Additionally, FOMC member Neel Kashkari indicated that the neutral rate might now be higher post-pandemic.

As the dollar remains resilient, gold prices may continue to face downward pressure in the short term, especially with upcoming FOMC member speeches and the Empire State Manufacturing Index release.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at $103.28, slightly down by 0.07%, but the overall outlook remains bullish due to the ascending channel on the 2-hour chart.

The pivot point at $103.17 is key support, with the 50-day EMA just below at $102.94, reinforcing this level.

If the price holds above $103.17, the next targets are resistance levels at $103.36, followed by $103.47 and $103.58.

On the downside, immediate support is at $103.04, with deeper supports at $102.92 and $102.79.

A break below $103.17 could trigger a sell-off, but as long as it remains above, the bullish momentum should persist.

Gold – Technical Analysis

Gold (XAU/USD) is down 0.20%, trading at $2,643.61, with support at $2,647.26. A breakout above $2,647 could target $2,656.86 and $2,665.47.

A bearish engulfing candle signals potential downside risk, with immediate support at $2,636.12. Traders should watch the 50-day EMA at $2,646.95 and the 200-day EMA at $2,640.05 for further movement.

Sterling Drops as UK Jobless Rate Holds at 4.0%

The British pound weakened after mixed UK labor market data. The unemployment rate held steady at 4.0%, in line with expectations, while the Claimant Count Change surged to 27.9K, above the forecast of 20.2K.

Meanwhile, the Average Earnings Index remained unchanged at 3.8%, indicating stagnant wage growth. This data suggests ongoing labor market challenges, putting downward pressure on the pound.

GBP/USD Technical Analysis

The GBP/USD is trading at $1.30577, forming a symmetrical triangle pattern on the 2-hour chart.

This pattern is creating resistance around the $1.30666 pivot point, with the 50-day EMA closely aligned at $1.30693, reinforcing the pressure.

A break above this level could signal a bullish breakout, pushing prices toward the next resistance at $1.30931, and potentially higher to $1.31128 or $1.31321.

However, immediate support lies at $1.30338, and a fall below could push the pair toward $1.30132.

For now, the price action remains neutral, with traders keeping an eye on a potential breakout. A bullish move above $1.30666 could shift sentiment toward the upside.

Euro Stagnates Amid Mixed German Economic Data

The euro remains steady as German wholesale prices declined by 0.3%, slightly better than the prior 0.8% drop. Meanwhile, French final CPI held at -1.2%, reflecting ongoing deflationary pressures.

Investors are now focusing on Germany’s ZEW Economic Sentiment report, expected at 10.2, and Eurozone Industrial Production, forecasted to rise by 1.8%. These key indicators will shape the euro’s short-term trajectory.

EUR/USD Technical Forecast

The EUR/USD is trading at $1.08916, with a bearish tone as it remains within a downward channel. Immediate support is seen at $1.08852, and a break below could push prices toward $1.08666.

On the upside, resistance is marked at $1.09271, with stronger levels at $1.09491. Interestingly, a doji candle formation suggests indecision, signaling a potential bullish reversal from the $1.0885 support level.

However, the 50-day EMA at $1.09311 serves as a key resistance level. Traders should watch for a breakout above $1.09093, as this could signal a shift toward a more bullish bias.