US Dollar Forecast: Strengthens as 10-Year Bond Break Resistance, Bond Yield, GBP/USD and EUR/USD Outlook

US Dollar Strengthens as 10-Year Bond Yields Surge

The US Dollar continued its upward trajectory, bolstered by the Federal Reserve’s slower rate cuts and expectations of US economic growth. The dollar rose over 7% since September, supported by inflation and Fed projections for a more gradual easing.

Meanwhile, the US 10-year bond yield reached a 7-month high of 4.629%, as the Fed’s dovish stance contrasted with global growth and interest rate projections. The widening rate differentials between the US and other economies contributed to dollar strength.

As markets remain focused on rates, trading volumes are expected to stay light heading into the new year.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is holding steady at $108.12, showing a slight 0.04% gain. The price remains above its pivot point at $107.93, suggesting short-term bullish momentum. A break above the immediate resistance at $108.54 could push the index higher toward the next resistance level at $108.90.

On the downside, key support lies at $107.60, with further support around $107.18. The 50-day EMA at $107.64 and the 200-day EMA at $106.48 are also indicating an upward trend.

With the index trending in an upward channel, it’s likely to maintain its bullish outlook unless it breaks below support levels.

US 10-year Bond Yields

The U.S. 10-year bond yield recently surged to 4.62%, breaking through resistance levels, reflecting investor confidence in a stronger U.S. economy and expectations for slower interest rate cuts. The rise in yields is indicative of growing demand for higher returns amid an uncertain global economic landscape.

A stronger 10-year yield typically supports a stronger U.S. Dollar (DXY) as higher yields attract foreign investment.

As the yield moves above the 4.58% mark, there is a risk of further strengthening in the U.S. Dollar, which could pressure commodities and assets priced in USD, including gold and silver.

GBP/USD Technical Analysis

The GBP/USD pair is trading at $1.25296, showing a minor 0.01% drop. The key pivot point is at $1.26078, which will determine the next move. If the pair breaks above this level, it could test resistance at $1.27090, with further potential toward $1.28140.

On the downside, immediate support lies at $1.24746, and if this level is breached, the next support is at $1.23883.

The 50-day Exponential Moving Average (EMA) at $1.27541 and the 200-day EMA at $1.28053 suggest a bearish bias unless the pair pushes above the $1.26078 pivot. A break higher could lead to a more bullish outlook.

EUR/USD Technical Forecast

The EUR/USD pair is currently trading at $1.03912, reflecting a slight decline of 0.13%. The key pivot point is at $1.04465, which will likely dictate the next move. If the price breaks above this level, the pair could target immediate resistance at $1.05324, with further upside toward $1.06288.

On the downside, support is found at $1.03426, and if the price falls below this, it may test the next support at $1.02760.

The 50-day Exponential Moving Average (EMA) at $1.06096 and the 200-day EMA at $1.07860 indicate that the longer-term trend is still somewhat bearish. A break above $1.04465 could signal a shift toward a more bullish outlook.