US Dollar Forecast: Treasury Yields Near 4.6% Support Dollar Strength; Gold, GBP/USD, and EUR/USD Outlook

US Dollar Steady Near 2-Year High as Gold Consolidates

During the Christmas holiday season, financial markets often experience reduced trading volumes, leading to limited price movements. The U.S. Dollar Index (DXY) remains steady at 108.16, supported by higher Treasury yields near 4.6% and expectations of fewer Federal Reserve rate cuts in 2025. Despite the thin holiday trading, the dollar hovers near a two-year high, reflecting investor confidence in the U.S. economy.

In contrast, gold prices are consolidating around $2,626 per ounce, maintaining their status as a safe-haven asset amid ongoing geopolitical concerns. The limited market activity during the holiday season contributes to the metal’s steady performance.

Recent U.S. economic data presents a mixed picture such as Durable Goods Orders which decreased by 1.1% in November, indicating potential slowdowns in manufacturing. Moreover, Consumer Confidence fell to 104.7 in December from 111.7, suggesting growing consumer apprehension.

These indicators have had a muted impact on the dollar and gold due to the subdued trading environment. As the holiday season progresses, market participants anticipate that trading volumes will remain light, potentially leading to subdued price movements in both the U.S. dollar and gold.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at $108.16, up 0.03%, as it maintains its bullish momentum within an upward channel. The pivot point at $107.93 acts as a critical support level, with immediate resistance seen at $108.54. A sustained break above this resistance could propel the index toward $108.90, reflecting the continued strength of the dollar.

The 50-day EMA at $107.98 reinforces short-term support, while the 200-day EMA at $107.18 provides a broader safety net. If DXY fails to hold above $107.93, it could signal a sharp selloff, with initial support at $107.60 and a further decline toward $107.18. Traders should watch these levels closely as they outline the near-term directional bias.

GOLD Technical Analysis

Gold (XAU/USD) is trading at $2,626.76, up 0.37%, consolidating near the $2,629.62 pivot. Immediate resistance at $2,651.62 could push prices toward $2,679.38, while failure to hold above the pivot risks a pullback to $2,608.24 or further to $2,584.66.

The 50-day EMA at $2,621.04 offers near-term stability, with the 200-day EMA at $2,639.95 highlighting broader consolidation. A breakout above $2,629.62 could turn sentiment bullish, but momentum remains limited below this level.

GBP/USD Technical Analysis

The GBP/USD pair is trading at $1.25419, up 0.10%, as it consolidates near its pivot point of $1.25739. The pair faces downward pressure from a persistent trendline, with immediate resistance at $1.26400 limiting any meaningful upside. A break above this level could lead to further gains, targeting $1.27276. On the downside, immediate support rests at $1.24761, with a deeper safety net at $1.23883.

The 50-day EMA at $1.25618 aligns closely with the pivot point, providing short-term stability. However, the 200-day EMA at $1.26411 reinforces the bearish bias. Traders should monitor the $1.25739 pivot level carefully—sustained trading above this level could signal a bullish breakout, while failure may continue the downward trend.

EUR/USD Technical Forecast

The EUR/USD pair is trading at $1.03998, edging up 0.08% as it consolidates near its pivot point of $1.04156. Despite the slight gain, the pair remains in a cautious stance, with immediate resistance at $1.04699 limiting upward momentum. A break above this resistance could push EUR/USD toward $1.05471, signaling a potential shift in sentiment.

On the downside, immediate support lies at $1.03467, with further weakness exposing $1.02904.

The 50-day EMA at $1.04111 aligns with current levels, offering near-term stability, while the 200-day EMA at $1.04753 suggests bearish pressure persists. Traders should watch the $1.04156 pivot closely, as a decisive move above could encourage bullish momentum, whereas a failure to sustain above it may lead to further declines.