US Dollar Forecast: Will DXY Break Key Resistance? Bond Yield and GBP/USD Outlook

Market Overview

The US dollar faced pressure on Friday as mixed economic data presented a cautious outlook. The Flash Manufacturing PMI rose to 50.1, surpassing the forecast of 49.8, while the Services PMI fell to 52.8, missing expectations of 56.4.

Existing Home Sales exceeded expectations at 4.24M, while consumer sentiment slipped to 71.1, below the projected 73.3. Inflation expectations remained steady at 3.3%, providing little relief to market concerns.

Investors are now eyeing Monday’s New Home Sales data, forecasted at 669K, to assess the housing market’s strength and potential impact on the dollar.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at $107.536, up 0.06%, as the greenback struggles to gain momentum above key resistance levels. The pivot point at $107.815 remains crucial; a break above this level could open the door for further gains toward $108.519, with the next resistance at $109.215.

However, failure to hold above the pivot may push the index toward immediate support at $107.227, with a deeper decline possibly testing $106.700.

The 50-day EMA at $108.033 and the 200-day EMA at $108.434 indicate a bearish bias. Traders should watch for a decisive move above $107.815 to confirm bullish momentum.

US 10-year Bond Yields

The US 10-year bond yield has declined to 4.552%, breaking below key support at 4.593%, signaling potential downside momentum. The drop below the 50 and 200 EMA suggests weakening investor confidence in long-term economic growth or expectations of Federal Reserve rate cuts.

Lower yields typically weigh on the US dollar index (DXY), as they reduce the appeal of US assets, potentially leading to a weaker dollar.

If yields continue declining, it could bolster risk assets like equities and commodities, while a rebound may support the dollar and put pressure on gold and other safe-haven assets.

GBP/USD Technical Analysis

GBP/USD is currently trading at $1.24599, down 0.15%, as the pair struggles to maintain upward momentum. The price is hovering above the key pivot point at $1.24275, which acts as a critical support level. A break below this could accelerate selling pressure, potentially testing immediate support at $1.23757, followed by a deeper move toward $1.22937.

On the upside, immediate resistance is seen at $1.25047, with further gains eyeing $1.25751. The 50-day EMA at $1.23706 and the 200-day EMA at $1.23526 are providing dynamic support. Traders should watch for a sustained move above $1.24275, which could signal a bullish continuation, while failure may invite further downside.