US Dollar Forecast: Rebounds Toward $100 as Fed and PMI in Focus – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) stabilized near $99.16 on Wednesday, extending its recovery as markets await a cascade of U.S. economic updates and Federal Reserve commentary.

Price action followed a brief rally toward $99.26, supported by improving risk sentiment and fading trade uncertainty.

Dollar Traders Eye Fed Rhetoric and Economic Indicators

Attention now turns to a high-impact U.S. calendar. Scheduled remarks from FOMC members Goolsbee (1:00 PM ET), Waller (1:35 PM), and Hammack (10:30 PM) could help clarify the Fed’s tone amid diverging views on rate path timing.

Markets are currently pricing in three cuts by year-end, with June as a possible starting point.

Simultaneously, traders will watch for Flash Manufacturing PMI (forecast: 49.0, prior: 50.2) and Services PMI (forecast: 52.8, prior: 54.4) due at 1:45 PM ET, alongside New Home Sales (2:00 PM).

The Beige Book report at 6:00 PM ET may offer qualitative insight into regional business activity ahead of the May FOMC meeting.

Muted Volatility Ahead of U.S. Data Avalanche

Despite today’s cautious tone, the dollar remains technically supported above 98.98, with short-term traders closely watching the $100.00 psychological level. Recent optimism over U.S.-China trade dialogue and tariff clarity continues to underpin sentiment.

With global PMI readings turning mixed—Germany’s Flash Manufacturing PMI fell to 42.2, while UK and French prints also undershot forecasts—the greenback may benefit if U.S. indicators outperform.

Still, without a definitive Fed policy pivot, further dollar strength hinges on how incoming data align with market rate cut expectations.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading around $99.17, pausing after a strong rebound off the $98.00–$98.65 support zone. Price briefly broke above the $99.66 pivot but faced rejection near the descending trendline drawn from the April highs. This level remains a key ceiling, reinforcing bearish control unless decisively breached.

The 50 EMA is flat near current levels, while the 200 EMA remains elevated—suggesting bearish longer-term momentum despite the recent bounce. Immediate support is seen at $98.65, followed by $97.95. A close above $99.66 could open a path toward $100.38, but bulls need stronger volume and follow-through.

Until then, the downtrend remains intact. Watch for a clean break of the trendline to shift sentiment.

GBP/USD Technical Analysis

The British pound (GBP/USD) is attempting to recover near $1.3325, after a sharp drop to intraday lows of $1.3254. The bounce comes as price reclaims territory above the $1.3295 pivot—a zone that now serves as immediate support.Momentum remains fragile, with resistance overhead at $1.3355 and stronger supply around $1.3416. Bulls must clear these levels to regain upside traction. A rising trendline from April lows remains intact, offering a technical safety net near $1.3250.

The broader trend remains bullish as long as the pair holds above the trendline. Watch for confirmation if price reclaims $1.3355 or dips below $1.3250 again.

EUR/USD Technical Forecast

The EUR/USD pair is trading near $1.1384, consolidating after a swift drop from last week’s $1.1566 peak. Price action is now flirting with trendline support and the $1.1350 level, a key confluence zone. The pair briefly dipped below the 50 EMA (currently at $1.1424) but recovered, suggesting buyers remain active near support.

A sustained move above $1.1406 could revive bullish momentum toward $1.1476, while a break below $1.1350 risks deeper losses toward $1.1328. The rising trendline from April remains intact, making this a pivotal area for the short-term outlook.

Traders should monitor price reaction around the $1.1350–$1.1406 range for direction cues ahead of macro data catalysts.