US Dollar Forecast: Will DXY Break $107 on Fed Signals? – GBP/USD and EUR/USD Outlook

Market Overview

The US Dollar Index (DXY) is attempting a recovery from a two-month low, trading near $107. The greenback’s rebound is supported by US Treasury yields rising above 4.5%, signaling firm economic conditions. Federal Reserve Governor Christopher Waller emphasized that while recent data supports holding rates steady, policymakers could revisit rate cuts if inflation stabilizes.

Similarly, Philadelphia Fed President Patrick Harker advocated for maintaining current rates amid economic resilience.

Investors are now awaiting FOMC minutes for further guidance on the Fed’s rate outlook. With the Empire State Manufacturing Index and NAHB Housing Market Index scheduled for release, traders will be closely monitoring economic indicators for directional cues.

The dollar’s trajectory remains data-dependent, and any hawkish Fed signals could extend gains, pushing DXY beyond the $107 mark in the near term.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading near $107, slightly lower but holding above the pivot point at $106.561, which remains a key level for trend confirmation.

If buyers maintain control above this mark, immediate resistance at $107.315 could come into play, with a further push potentially testing $107.789.

However, the 50-day EMA at $107.447 and 200-day EMA at $107.865 suggest strong overhead resistance, making any upside move challenging.

On the downside, a break below $106.561 could expose the $106.031 support, with an extended drop targeting $105.574.

GBP/USD Technical Analysis

GBP/USD is hovering at $1.25946, showing mild weakness as it remains below the pivot point at $1.26295. The pair struggles to gain traction, with buyers needing a firm break above this level to shift sentiment.

If bulls push through, immediate resistance stands at $1.27200, followed by a stronger cap at $1.28127. However, until then, the bias leans bearish.

On the downside, support at $1.25474 is a key level to watch, with further declines potentially testing $1.24700. The 50-day EMA at $1.25082 and the 200-day EMA at $1.24597 reinforce downside risk unless momentum shifts upward.

EUR/USD Technical Forecast

EUR/USD is treading cautiously at $1.04565, showing little movement as traders assess the next directional cue. The pair remains just below the pivot point at $1.04840, which serves as a key level for trend confirmation.

A decisive break above this mark could trigger a push toward $1.05342, with the next hurdle at $1.05769. However, resistance at these levels could limit any meaningful upside.

On the downside, immediate support rests at $1.04253, with further declines potentially exposing $1.03719. The 50-day EMA at $1.04188 and the 200-day EMA at $1.04014 reinforce a bearish bias unless buyers reclaim momentum.