US Dollar Price Forecast: CPI Data to Shake DXY, GBP/USD, and EUR/USD Outlook

US CPI Data Could Impact Dollar Index

The upcoming U.S. CPI data, with expectations of a 0.2% m/m increase and a 2.5% y/y rate, could significantly influence USD and market sentiment. If inflation slows as predicted, it may reinforce expectations of a dovish stance from the Federal Reserve, potentially weakening the USD.

However, stronger-than-expected data could bolster the dollar and trigger market volatility as investors reassess the likelihood of future rate hikes. Markets will be closely watching the CPI release for direction.

US Dollar Index (DXY) – Technical Analysis 

The Dollar Index (DXY) is trading at $101.371, down 0.35%, showing a bearish bias as it struggles to break above the pivot point at $101.516. Immediate resistance lies at $101.778, with higher levels at $102.174 and $102.478.

On the downside, key support is at $101.139, followed by $100.858. The 50-day EMA at $101.443 hovers just above current prices, indicating that breaking above this level could signal a bullish reversal.

However, as long as the index remains below $101.516, downside pressure is likely to persist, with the potential for a deeper decline if support levels are breached.

UK GDP and Trade Data May Weaken GBP and Shake Markets

The latest UK GDP data shows stagnation at 0.0% m/m, missing the expected 0.2%, while construction output and industrial production also disappointed. With a goods trade balance deficit of £20B, wider than anticipated, these figures suggest economic sluggishness.

This could put downward pressure on the GBP as investors grow cautious about the UK’s economic health.

If weak data persists, it may lead to further market volatility and raise concerns over the Bank of England’s future policy moves.

GBP/USD Technical Forecast

The GBP/USD is trading at $1.30945, up 0.23%, as it maintains bullish momentum above the pivot point at $1.30606. Immediate resistance stands at $1.31317, with further upside targets at $1.31816 and $1.32369.

On the downside, key support levels are at $1.30138 and $1.29745, but a break below the pivot could signal a deeper correction. The 50-day EMA sits at $1.31168, just above the current price, which could act as a resistance point.

However, if GBP/USD stays above $1.30606, the bullish trend is likely to continue, while a break below could trigger sharp selling.

Weak German CPI, Italian Data May Pressure Euro Lower

Yesterday, the German Final CPI remained stagnant at -0.1%, aligning with expectations, while Italy’s industrial production fell sharply by -0.9%, missing the forecast of -0.2%. These weak economic indicators from two major Eurozone economies could exert downward pressure on the EUR.

With inflation remaining subdued and industrial output contracting, market sentiment toward the euro may turn bearish, potentially prompting investors to reassess the European Central Bank’s policy trajectory and economic outlook, driving increased volatility in EUR-related assets.

EUR/USD Technical Forecast

The EUR/USD is trading at $1.10405, up 0.28%, showing bullish momentum after bouncing off its pivot point at $1.10177. Immediate resistance lies at $1.10498, with stronger levels at $1.10707 and $1.10867.

Support is found at $1.09933 and $1.09709, but a drop below the pivot could trigger a sharp sell-off. The 50-day EMA at $1.10663 is above the current price, indicating room for more upward movement if resistance levels are broken.

However, keep an eye on the $1.10177 pivot point; a break below this could reverse the trend quickly.