US Dollar Forecast: Three Black Crows Signals More Losses for DXY – GBP/USD and EUR/USD Outlook

Market Overview

The US Dollar Index (DXY) continued its downward trajectory, slipping to 104.18, with an intra-day low of 104.06 as weaker economic data raised concerns over the strength of the US economy. The ADP Non-Farm Employment Change report revealed a significantly lower-than-expected job addition of 77K, well below the forecasted 140K and the previous month’s 186K.

This sharp slowdown in employment growth raised questions about the labor market’s resilience ahead of Friday’s Nonfarm Payrolls (NFP) report, which is expected to show 160K new jobs compared to 143K in January.

Despite some optimism from the ISM Services PMI, which rose to 53.5, the mixed economic data kept pressure on the Greenback. Meanwhile, ongoing trade policy uncertainties, including the US administration’s decision to extend auto import tariff exemptions for Canada and Mexico, further clouded market sentiment.

Upcoming Key Events to Watch

The Challenger Job Cuts report showed a 39.5% decline, signaling fewer layoffs but raising concerns amid weak job growth. Unemployment Claims are expected at 234K, slightly below 242K, offering insight into labor market stability. The Trade Balance deficit is forecast at -$128.3B, a sharp rise from -$98.4B, which could pressure economic growth.

Markets await FOMC speeches from Harker (2:45 PM UTC) and Waller (9:30 PM UTC) for insights on rate cuts and monetary policy shifts. With the US Dollar under pressure, traders will be watching labor market data and trade developments for further direction, particularly ahead of the NFP report on Friday.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at 104.18, holding just below its pivot point at 104.41, signaling a cautious market tone. A “Three Black Crows” candlestick pattern has emerged, often a sign of sustained bearish pressure, reinforced by a breakdown from its prior upward channel.

Technical indicators point to further downside risks, with the 50-day EMA at 107.02 and the 200-day EMA at 105.66, both acting as dynamic resistance levels.

If DXY fails to reclaim 104.41, it may extend losses toward 103.43, with a deeper move targeting 102.14. A break above 104.41, however, could shift sentiment, challenging resistance at 105.66.

GBP/USD Technical Analysis

GBP/USD is trading at 1.29024, edging lower as traders evaluate broader market sentiment. Despite the pullback, the pair remains above its pivot point at 1.28109, signaling a bullish bias as long as this level holds. A “Three White Soldiers” candlestick formation is in play, typically indicating sustained buying momentum.

Technical indicators reinforce this trend, with the 50-day EMA at 1.25803 and the 200-day EMA at 1.26841, both supporting the broader upward movement.

A breakout above 1.30414 could open the door for further gains toward 1.32653. However, a break below 1.28109 may shift momentum, exposing GBP/USD to key support at 1.25722.

EUR/USD Technical Forecast

EUR/USD is trading at 1.07999, showing a slight decline as traders assess shifting sentiment around the U.S. dollar. The pair remains above its key pivot point at 1.07684, signaling potential bullish momentum as long as this level holds. A “Three White Soldiers” candlestick pattern is emerging, a bullish signal that suggests continued upside potential.

Technical indicators reinforce this outlook, with the 50-day EMA at 1.04746 and the 200-day EMA at 1.06420, both pointing to a strengthening trend. If EUR/USD breaks above 1.09327, the next upside targets are 1.10831. However, a drop below 1.07684 could trigger a bearish reversal, exposing the pair to 1.06243 and further downside at 1.04724.