US Dollar Price Forecast: Core PCE Index in Focus – GBP/USD and EUR/USD Outlook

Market Overview

The US Dollar showed resilience despite mixed economic indicators, reflecting cautious optimism among investors. Preliminary GDP growth for Q4 came in at 2.3%, matching expectations and reinforcing confidence in the economy’s stability. However, unemployment claims rose to 242K, exceeding the forecast of 222K, indicating potential softening in the labor market.

Durable goods orders surprised positively, increasing by 3.1% compared to the expected 2.0%, signaling sustained demand. Meanwhile, the GDP Price Index edged up to 2.4%, slightly above the anticipated 2.2%, suggesting moderate inflationary pressures.

Upcoming data releases, including the Core PCE Price Index and Chicago PMI, will provide further insights into inflation and economic activity. Investors are also watching remarks from FOMC members and President Trump for potential policy clues.

For now, the US Dollar maintains a bullish stance, supported by solid GDP figures and resilient consumer demand, although rising jobless claims warrant caution.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at 107.386, slightly down but hovering just above the Pivot Point at 107.394. This level is crucial because holding above it suggests continued bullish momentum. Immediate resistance is at 107.952, followed by a stronger barrier at 108.507.

If the index breaks above these levels, it could indicate renewed buying interest, especially if it moves above the 50-day Exponential Moving Average (EMA) at 106.805.

On the downside, support is seen at 106.768, with a more substantial floor at 106.152. A break below 107.394 could shift the trend to bearish, possibly triggering a sell-off towards the next support zones. However, as long as DXY stays above the 200-day EMA at 107.135, the outlook remains bullish.

GBP/USD Technical Analysis

GBP/USD is trading at 1.25811, down 0.02%, hovering just above the Pivot Point at 1.25718. The pair is testing a key support level, and the price action suggests that buyers are cautiously defending this zone. An upward trendline is supporting the bullish sentiment, indicating that buying momentum could strengthen if prices hold above 1.25718.

Immediate resistance is at 1.26361, with a stronger hurdle at 1.27147. A break above these levels could push GBP/USD higher, particularly if it crosses the 50-day Exponential Moving Average (EMA) at 1.26340.

On the downside, if the pair breaks below 1.25718, it could trigger a selling trend, targeting the next support at 1.25203, followed by a deeper cushion at 1.24776. The 200-day EMA at 1.25697 provides additional support, reinforcing the bullish bias above 1.25718.

EUR/USD Technical Forecast

EUR/USD is trading at 1.03906, slightly up by 0.01%, showing a cautious bullish sentiment as it hovers above the Pivot Point at 1.03892. The pair is trying to maintain its upward momentum, supported by an upward trendline that indicates buying interest around the 1.0389 level.

Immediate resistance stands at 1.04424, followed by a stronger barrier at 1.04893. A break above these levels could push EUR/USD higher, testing the 50-day Exponential Moving Average (EMA) at 1.04537.

On the downside, support is seen at 1.03504, with a deeper cushion at 1.03157. If the price falls below 1.03892, it could trigger a selling trend, pushing the pair towards these support zones. The overall outlook remains bullish above 1.03892, but a break below this level would shift momentum back to the bears.