US Dollar Forecast: Fed Cues Shape Market Sentiment – Gold, GBP/USD and EUR/USD Outlook

US Dollar Strength Pressures Gold Amid Mixed PMI Data

The US Dollar remained robust following a rise in the ISM Manufacturing PMI to 47.7, up from 46.5, signaling improved factory activity. Meanwhile, the ISM Manufacturing Prices Index increased to 55.2, reflecting inflationary pressures. Construction spending grew modestly at 0.2%, indicating slight economic stability.

Gold faced headwinds as the dollar gained, trading near $2,627, with bearish momentum dominating. Market participants are watching comments from FOMC members Waller and Williams for monetary policy cues.

A strong dollar and rising bond yields continue to weigh on gold’s safe-haven appeal, while traders await key Nonfarm Payrolls data later this week.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at $106.27, up 0.47%, reflecting strong bullish momentum as it climbs above its pivot point at $106.13. Immediate resistance stands at $106.50, with further targets at $106.67 and $106.92. On the downside, support is seen at $105.87, followed by deeper levels at $105.59 and $105.31.

The 50-day EMA at $106.11 supports the bullish bias, while the 200-day EMA at $106.37 indicates potential overhead resistance.

If DXY maintains its position above $106.13, it could aim for higher resistance levels. However, a break below the pivot point may signal a reversal, with sharper declines likely toward $105.87 or below.

Gold – Technical Analysis

Gold (XAU/USD) is trading at $2,627.89, down 0.85%, breaking below its $2,635.63 pivot point. Resistance lies at $2,649.58, while support is marked at $2,621.06. The RSI indicates bearish momentum, with the 50-day EMA at $2,645.84 reinforcing resistance.

A double-bottom pattern near $2,610.90 could deepen declines unless prices reclaim levels above $2,635.63, signaling potential recovery. Traders remain cautious amid continued downside pressure.

Sterling Stable Amid Mixed Housing and PMI Data

The British pound showed resilience as Nationwide HPI surged by 1.2% in November, beating forecasts of 0.2%. Mortgage approvals rose to 68K, indicating steady housing demand, while Net Lending to Individuals climbed to £4.5B, signaling improved consumer activity.

However, the Final Manufacturing PMI remained at 48.6, reflecting ongoing contraction in the manufacturing sector. Traders are cautious ahead of further UK economic data, with Sterling maintaining a stable outlook against key currencies.

GBP/USD Technical Analysis

The GBP/USD pair is trading at $1.26911, down 0.28%, but still clinging to its pivot point at $1.26809. Immediate support is located at $1.26605, with deeper levels at $1.26442 and $1.26206. On the upside, resistance stands at $1.27187, followed by $1.27462 and $1.27714.

Both the 50-day EMA at $1.26889 and the 200-day EMA at $1.26568 provide near-term guidance, with the upward trendline supporting a cautiously bullish outlook.

A sustained break above $1.26809 could signal a potential uptrend, targeting the immediate resistance levels. However, failure to hold above the pivot might lead to sharper declines, as sentiment remains fragile. Keep an eye on a break below $1.26809 for potential downside pressure.

Eurozone PMI Data and Unemployment Rates Under Spotlight

The euro faces mixed sentiment as key figures from the Eurozone take center stage today. Spain’s Manufacturing PMI is forecast at 53.9, down from 54.5, while Italy’s is expected to dip to 46.1 from 46.9, highlighting ongoing economic challenges.

French Manufacturing PMI is forecast at 43.3, and Germany’s remains weak at 43.2, signaling continued contraction. Meanwhile, Eurozone unemployment holds steady at 6.3%. Last week, German Retail Sales fell sharply by 1.5%, while French Consumer Spending dropped 0.4%.

These figures, combined with today’s data, will shape the euro’s short-term performance in forex markets.

EUR/USD Technical Forecast

The EUR/USD pair is trading at $1.05147, down 0.56%, indicating continued bearish momentum as the price struggles below its pivot point at $1.05382. Immediate support lies at $1.05087, followed by deeper levels at $1.04796 and $1.04575, while resistance is seen at $1.05615 and $1.05981.

The 50-day EMA at $1.05469 and the 200-day EMA at $1.05396 are reinforcing overhead resistance, suggesting limited upside potential.

A triple-bottom breakout near $1.05382 signals further downside risk unless reversed by a move above the pivot. Traders should watch for any sustained push above $1.05615 to gauge a potential recovery, but the prevailing sentiment remains bearish for now.