US Dollar Forecast: DXY Weakens as Fed Cuts Rates to 5%; GBP/USD and EUR/USD Outlook

US Dollar Weakens as Fed Cut Rates to 5%

The US Dollar (DXY) is trading cautiously as market participants closely monitor unemployment claims, which are expected to hold steady at 230K, and the Philly Fed Manufacturing Index, forecasted at -0.8. Both releases will provide fresh insights into the state of the US economy.

Additionally, following the Federal Reserve’s decision to lower interest rates to 5.00%, attention now shifts to how this adjustment will influence the dollar’s direction. Traders are also awaiting existing home sales data at 14:00, expected at 3.92M.

US Dollar Index (DXY) – Technical Analysis 

The Dollar Index (DXY) is trading at $100.708, up by 0.08%, but remains under pressure as it hovers below the pivot point of $100.860.

Immediate resistance is seen at $101.047, followed by $101.204 and $101.351.

On the downside, key support levels are $100.555, with further support at $100.322 and $100.106.

The 50-day EMA at $101.054 suggests continued near-term weakness, while the 200-day EMA at $101.828 reinforces the broader bearish sentiment.

A bearish engulfing pattern on the chart signals a potential continuation of the selling trend.

A break below $100.860 could intensify the bearish momentum, but a break above this level may offer a shift toward bullishness.

Sterling Flat Ahead of BoE Rate DecisionGBP/USD remains steady after the UK’s CPI came in at 2.2%, matching forecasts. Traders are now looking ahead to the Bank of England’s (BoE) monetary policy summary and rate decision tomorrow.

The BoE is expected to maintain the interest rate at 5.00%, but any surprise from the voting structure or rate changes could trigger significant market movements.

GBP/USD Technical Forecast

The GBP/USD is trading at $1.32513, down slightly by 0.03%, yet still maintaining its position above the pivot point at $1.32300. Immediate resistance is seen at $1.32991, with further targets at $1.33372 and $1.33728.

On the downside, key support is found at $1.31830, followed by $1.31469 and $1.31142.

The 50-day EMA at $1.31579 offers solid near-term support, while the 200-day EMA at $1.30578 reinforces a broader bullish trend.

A bullish engulfing pattern on the 4-hour chart hints at continued buying interest, but a break below $1.32300 could spark sharper selling pressure.

EUR/USD Steady, Focus on Buba President’s Speech

EUR/USD is currently stable after the release of Germany’s final CPI, holding at 2.2%. Traders are eyeing German Buba President Nagel’s speech today for further insights into the ECB’s monetary stance. With the weaker Current Account figure of €39.6B, the pair could experience some volatility.

EUR/USD Technical Forecast

The EUR/USD is trading at $1.11459, up by 0.02%, maintaining a slight bullish momentum.

The pivot point sits at $1.11313, with immediate resistance at $1.11754, followed by $1.12007 and $1.12288.

On the downside, immediate support is found at $1.10933, with further support levels at $1.10683 and $1.10444.

The 50-day EMA at $1.10950 and the 200-day EMA at $1.10405 provide solid support, reinforcing the bullish outlook.

A bullish engulfing pattern on the 4-hour chart suggests further upward movement, but if the price breaks below $1.11313, we could see sharp selling pressure.