US Dollar Forecast: Steady Ahead of Trump’s Speech – GBP/USD and EUR/USD Outlook

Market Overview

As the World Economic Forum (WEF) begins in Davos, the focus is shifting to the absence of several key global figures. The absence of key leaders at the World Economic Forum (WEF) may create uncertainty around global economic cooperation, impacting USD sentiment.

President-elect Donald Trump’s virtual address could provide policy insights, but without major players like China’s Xi Jinping and India’s Narendra Modi, markets may remain cautious. If Trump’s speech reassures investors on trade and fiscal policies, the dollar could strengthen.

However, hints of protectionist measures might trigger volatility. Limited high-level dialogue could reduce market-moving news, keeping USD in a narrow range as investors focus on inflation, trade, and monetary policy signals from other attending officials.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is currently trading at $108.475, up 0.85%, signaling renewed strength amid market uncertainty. The index is hovering below the key pivot point at $109.196, a crucial level that could dictate the next directional move. Immediate resistance stands at $110.084, followed by a higher target at $110.690.

On the downside, support is seen at $108.608, with further cushion at $107.949. The 50-day EMA at $109.055 suggests short-term bullish momentum, while the 200-day EMA at $108.028 reinforces long-term strength. A sustained break above $109.196 could extend the rally, while failure to hold may trigger a corrective pullback.

GBP Outlook: Jobs Data Disappoints, WEF Focus Ahead

The British pound faced pressure after the latest UK labor data showed weaker-than-expected claimant count figures, rising by only 0.7K compared to the forecast of 10.3K.

The unemployment rate edged higher to 4.4%, exceeding expectations of 4.3%, raising concerns about labor market stability. However, average earnings remained steady at 5.6%, offering some relief.

Markets now turn their attention to the ongoing WEF Annual Meetings for further insights into global economic prospects.

GBP/USD Technical Analysis

GBP/USD is currently trading at $1.22757, down 0.36%, as the pair struggles to hold above the pivot point at $1.22625. Despite the short-term pressure, staying above this level keeps the outlook cautiously bullish, with immediate resistance at $1.23678 and a more significant hurdle at $1.24952.

The 50-day EMA at $1.22619 offers nearby support, reinforcing the importance of the pivot level.

On the downside, a break below could push the pair toward $1.20987, with further declines eyeing $1.19575. The broader trend remains uncertain, with the 200-day EMA at $1.24619 acting as a key resistance level.

EUR Outlook: Weak Data Hits Sentiment, WEF Focus

The euro faced downward pressure after Germany’s Producer Price Index (PPI) declined by 0.1%, missing expectations of a 0.3% increase. This weaker-than-expected data signals slowing industrial activity and adds to concerns about eurozone economic growth.

Investors are now closely watching the upcoming German ZEW Economic Sentiment report and ECOFIN meetings for further market direction. The ongoing WEF Annual Meetings could provide insights into the broader economic outlook for the eurozone.

EUR/USD Technical Forecast

The EUR/USD pair is currently trading at $1.03764, down 0.37%, as market sentiment leans bearish amid economic uncertainties. The pair remains above the pivot point at $1.03532, which acts as a crucial support level.

Holding above this level keeps the bullish outlook intact, with immediate resistance at $1.04322 and further upside potential toward $1.05351. However, a break below the pivot could accelerate selling pressure, targeting support at $1.02659 and $1.01900.

The 50-day EMA at $1.03157 provides short-term support, while the 200-day EMA at $1.04028 signals broader resistance.