US Dollar Forecast: Struggles for Support Ahead of GDP and Jobless Data – GBP/USD and EUR/USD

Market Overview

The U.S. dollar is under pressure, with the Dollar Index (DXY) retreating to $104.39 amid falling Treasury yields and mounting trade policy uncertainty. The 2-year yield has eased to 4.00%, while the 10-year yield sits at 4.34%, reflecting growing investor caution over the Federal Reserve’s path forward and the broader impact of proposed tariffs.

Trade concerns remain a key driver of sentiment. Former President Donald Trump confirmed a 25% tariff on automobiles effective April 3, though auto parts have been temporarily exempted until May 3. This lack of clarity continues to weigh on the dollar, with markets uneasy about the economic fallout from escalating protectionist policies.

Fed officials are also sounding alarms. St. Louis Fed President Alberto Musalem warned that tariff-driven inflation could threaten economic stability, while Minneapolis Fed President Neel Kashkari emphasized that inflation remains uncomfortably high. Both noted that policy uncertainty—especially on fiscal and trade fronts—complicates the Fed’s ability to plan ahead.

Despite the Fed’s reluctance to ease rates prematurely, the dollar is struggling to find support. Kashkari remarked, “The job market has stayed strong, but the biggest challenge is to finish the job,” referencing the Fed’s 2% inflation target. With Treasury yields softening and risk appetite faltering, investor demand for the dollar has weakened in the short term.

Traders are now watching Thursday’s economic data slate, particularly the final Q4 GDP Annualized figure and Initial Jobless Claims. These releases could shift expectations around rate policy and influence dollar positioning.

While the Fed’s hawkish undertone would typically anchor the dollar, the combination of lower yields and heightened trade risk is tilting sentiment bearish—at least for now.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is holding steady around $104.39, sitting just above its 200-day EMA at $104.38 and the 50-day EMA at $104.21. This tight alignment near the pivot point at $104.263 suggests the market is at a technical crossroads.

Price remains within a rising channel on the 4-hour chart, reinforcing a short-term bullish bias. Immediate resistance sits at $104.673, and a break above could open the door toward $105.163.

On the flip side, support at $103.776 and $103.211 may attract buyers if the index falters. For now, staying above $104.263 keeps the bullish structure intact, with trendlines continuing to guide higher lows. Traders will likely watch for a breakout or failure around $104.67 to gauge momentum.

GBP/USD Technical Analysis

GBP/USD is trading near $1.29188, struggling to stay above its pivot point at $1.29253, which also aligns with the 50-day EMA. Price action remains pinned within a downward-sloping channel on the 4-hour chart, reinforcing a mild bearish bias.

The pair needs a decisive push above $1.29668 to shift sentiment toward $1.30141, but until then, sellers appear in control. Immediate support is seen at $1.28665, with a further floor near $1.28212.

The 200-day EMA at $1.28899 offers a soft cushion, but momentum remains weak. Unless buyers reclaim control above the pivot, the path of least resistance stays to the downside, especially with trendlines favoring continued pressure.

EUR/USD Technical Forecast

EUR/USD is drifting lower, trading around $1.07723 after failing to hold above the $1.08079 pivot. Price action remains capped by the 50-period EMA at $1.08024, which now aligns with a descending trendline on the 4-hour chart. This confluence is acting as a clear technical barrier, reinforcing bearish sentiment in the short term.

A clean move back above $1.08079 would be needed to challenge resistance at $1.08578 and potentially $1.09128, but for now, the bias stays tilted to the downside. Immediate support is at $1.07342, with a deeper floor near $1.06772.

With the pair below both the 50- and 200-period EMAs, momentum favors sellers, and traders may remain cautious until the pair reclaims key levels.