US Dollar Forecast: Fed Rate Cut on the Horizon – Gold, GBP/USD, and EUR/USD Outlook

US Dollar Pressured as Key Economic Data and Fed Decision Loom

The U.S. dollar faces a critical period with key economic data releases and Federal Reserve announcements approaching. Unemployment claims are forecasted at 223K, slightly up from the previous 216K, while preliminary unit labor costs are expected to rise by 1.1%, reflecting potential wage pressures.

The Fed is anticipated to lower the federal funds rate to 4.75%, which could impact dollar strength. A weaker dollar generally benefits gold as a non-yielding asset, making it more attractive to investors.

The FOMC statement and press conference could add volatility to gold and USD assets, with traders closely watching for policy hints.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) has softened to 104.72, down 0.36%, after failing to hold above the pivot at $104.95. With immediate support just below at $104.66, the index may test further declines, especially as it hovers near the 38.2% Fibonacci retracement level.

Should this support give way, we could see the DXY drift toward the 50-day EMA at $104.40, a key level to watch.

On the upside, resistance sits at $105.21, and a move above could shift momentum back toward a bullish outlook. For now, the index leans bearish below $104.95, with room for further downside if support levels break.

Gold – Technical Analysis

Gold (XAU/USD) stabilizes around $2,657.35 after a recent drop, holding near key support at $2,643.35. A break below this level could push prices lower toward $2,625.49.

Immediate resistance stands at $2,683.93, with a bearish outlook reinforced by the 50-day EMA at $2,724.84. However, oversold indicators suggest a possible short-term bounce if support holds.

Sterling in Focus as BOE Rate Decision and Bailey’s Speech Loom

Sterling is under pressure ahead of critical updates from the Bank of England, including the Monetary Policy Report and the anticipated rate cut from 5.00% to 4.75%.

The latest Construction PMI data came in weaker than expected at 54.3, reflecting a slowdown in the sector.

Traders are closely monitoring BOE Governor Bailey’s speech, which could provide insights into future policy direction, especially with a divided MPC vote on rate adjustments.

GBP/USD Technical Analysis

The GBP/USD pair is showing some strength, currently trading at $1.29459, up 0.52% today. With support holding above the pivot point at $1.29159, there’s a cautiously bullish tone in the short term.

Immediate resistance sits at $1.29664, followed by stronger resistance around $1.30021, which traders will be watching closely. The 50-day EMA at $1.29371 is just below the current price, reinforcing the upward trend.

If GBP/USD breaks through $1.30021, it could target the next resistance at $1.30411. However, a drop below the pivot would shift momentum, potentially inviting selling pressure toward the $1.28849 support.

For now, the pair remains in a bullish zone, but any move below $1.29159 may change that outlook.

Euro Slips as German Industrial Production Falls Sharply

The Euro faces pressure after disappointing economic data from Germany and France. German industrial production fell by 2.5%, significantly below the -1.1% forecast, reflecting economic weakness in Europe’s largest economy. Additionally, the German trade surplus narrowed to €17.0B, missing expectations.

In France, preliminary private payrolls dipped by 0.1%. Upcoming retail sales data will be crucial for the Euro’s short-term outlook, as traders assess economic resilience in the Eurozone amid signs of slowing growth.

EUR/USD Technical Forecast

EUR/USD is seeing a slight recovery, currently trading at $1.07695, up 0.38% on the day. This bounce comes as the pair finds support near the pivot point at $1.07437, with potential resistance levels just above at $1.07795 and $1.08105.

Traders are eyeing the 50-day EMA at $1.08281, which could act as a cap if momentum falters. However, with the pair completing a 23.6% Fibonacci retracement, there’s potential for more buying pressure if it holds above $1.07437.

On the downside, a break below this level could lead to further selling toward the next support at $1.07165.