US Dollar Forecast: Falls Below 100.00 as Fed Rate Cuts Eyed – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) extended its decline for a third straight session, slipping below the 100.00 level and nearing a three-year low at 99.01. The drop reflects growing investor concerns over a slowing U.S. economy and a dovish shift in Federal Reserve policy expectations.

Mixed Data Dims Dollar Outlook

Economic indicators have been uneven. The University of Michigan’s consumer sentiment index fell to 50.8 in April, while inflation expectations surged to 6.7%. March’s Producer Price Index rose 2.7% year-over-year, down from 3.2% in February, signaling cooling input costs.

Labor market data showed initial jobless claims at 223,000, while continuing claims dipped slightly to 1.85 million. Meanwhile, CPI eased to 2.4% in March, down from 2.8% in February. Core CPI also fell to 2.8%, reinforcing views that inflationary pressures are moderating.

Trade and Policy Divergence Add Pressure

China’s Finance Ministry raised tariffs on U.S. goods to 125%, following U.S. tariff hikes to 145%. The tit-for-tat measures have reignited fears of a prolonged trade dispute.

FOMC minutes show the Fed balancing inflation risks with slowing growth. Markets now expect rate cuts as early as May, with 100 basis points of easing priced in for 2025.

Simultaneously, China’s central bank is expected to ease policy further in Q2, widening the divergence in global monetary stances and weighing further on the dollar.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is under pressure, slipping to $99.48 after failing to hold above key support at $100.29. The breakdown below the 1.618 Fibonacci extension ($99.83) underscores ongoing bearish momentum, with immediate support now resting at $98.95 and deeper footing near $98.33.

Meanwhile, resistance sits at $100.29 and then $101.24 if bulls attempt a rebound. The 50 EMA at $101.91 and the 200 EMA at $103.78 remain firmly above price, reinforcing the downside bias.

Momentum is weak, and sellers are clearly in control. If DXY fails to reclaim $100, it risks sliding toward the $97.55 level—a key extension zone that could invite more volatility ahead of U.S. macro data releases. The dollar’s technical picture remains fragile. Traders should watch for any recovery above $100.29 to assess short-term shifts in sentiment.

GBP/USD Technical Analysis

The British pound (GBP/USD) is making a quiet but convincing move higher against the U.S. dollar, now trading at $1.3169 and hugging the upper band of a rising price channel. The pair has reclaimed both the 50 EMA ($1.2978) and 200 EMA ($1.2926), confirming short-term bullish momentum.

Immediate resistance lies at $1.3208, followed by $1.3302, where the channel could face stronger headwinds.

Support rests at $1.3094, with deeper backing at $1.2985 if the rally stalls. As long as price holds the channel and remains above the key EMAs, dips may continue to be viewed as buying opportunities, especially with the dollar under pressure. Momentum favors the bulls.

A breakout above $1.3208 could invite fresh upside toward $1.3302, while a drop below $1.3094 may slow the ascent.

EUR/USD Technical Forecast

The EUR/USD continues to press higher against the U.S. dollar, trading near $1.1385 after a sharp run-up that broke above $1.1353 support-turned-pivot. The pair has cleared major trendline resistance and remains comfortably above the 50 EMA ($1.1186) and 200 EMA ($1.0976), signaling a strong bullish structure. Immediate resistance is seen at $1.1457, and a breakout above this could push price toward $1.1525.

On the downside, $1.1353 now serves as first support, followed by $1.1246. Momentum looks intact, but short-term consolidation is likely before a renewed test of recent highs.

As long as the euro holds above $1.1353, dips may find eager buyers. EUR/USD remains in bullish territory. A decisive move above $1.1457 could extend gains, while $1.1353 is key to maintaining upward momentum.