US Dollar Price Forecast: Fed Minutes and Jobs Report to Steer Market – GBP/USD and EUR/USD Outlook

US Dollar Outlook: Employment Data and Fed Minutes in Focus

The US Dollar showed mixed movement on Wednesday as key employment data revealed weaker-than-expected ADP Non-Farm Employment Change at 122K, below the forecast of 139K. Unemployment Claims improved, falling to 201K from 211K, supporting labor market resilience. Final Wholesale Inventories remained flat at -0.2%, reflecting subdued business stockpiling.

Upcoming events, including FOMC Meeting Minutes, Consumer Credit data, and the Challenger Job Cuts report, are expected to offer further insights into the Fed’s monetary stance.

On Friday, critical figures like Non-Farm Payrolls and Average Hourly Earnings will determine the greenback’s near-term direction, with the unemployment rate expected to stay at 4.2%.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at 109.058, down 0.05%, showing a cautious tone as it hovers near the pivot point at $108.515. The 4-hour chart highlights a consolidation phase, with bullish momentum intact above the pivot. Immediate resistance is seen at $109.529, with the next target at $110.017. On the downside, support lies at $107.758, with a deeper level at $107.147.

The 50 EMA at $108.530 aligns closely with the pivot point, reinforcing its significance as a key level. The 200 EMA at $107.372 provides broader support, indicating a long-term bullish structure. A sustained move above $109.529 could drive further gains, while a break below $108.515 may shift momentum toward bearish territory.

Sterling Slides Amid Weak Shop Price Index Data

The British Pound faced pressure as the BRC Shop Price Index fell 1.0% year-over-year in December, deeper than the forecasted -0.4% decline and the previous -0.6%.

The sharp drop signals weakening retail prices, reflecting subdued consumer spending.

Markets now turn their focus to MPC Member Breeden’s speech at 9:00 PM, which may provide further insights into monetary policy expectations and the Bank of England’s stance amidst ongoing economic challenges.

GBP/USD Technical Analysis

GBP/USD is trading at 1.23333, down 0.21%, as bearish momentum dominates below the pivot point at $1.23685. The 4-hour chart reveals a solid bearish engulfing candle, signaling further downside potential. Immediate support is at $1.22706, followed by a deeper level at $1.21985, marking critical zones for bearish continuation. Resistance stands at $1.24487, with a stronger hurdle at $1.25639.

The 50 EMA at $1.24778 reinforces near-term resistance, while the 200 EMA at $1.26128 highlights broader bearish sentiment. The pair’s failure to reclaim $1.23685 suggests sellers are firmly in control. A break below $1.22706 could accelerate selling, while a rebound above $1.23685 may trigger bullish recovery toward $1.24487.

Euro Declines as German Data Disappoints

The Euro faced selling pressure following disappointing German economic data. Factory orders plunged 5.4%, far below the forecasted -0.3%. Retail sales also declined by 0.6%, missing expectations of 0.5%.

Meanwhile, the French trade balance stood at -€7.1 billion, slightly worse than the forecast. On a positive note, Eurozone PPI rose by 1.6%, exceeding expectations.

Markets now await Thursday’s ECB Economic Bulletin and German industrial production data to assess the region’s economic trajectory further.

EUR/USD Technical Forecast

EUR/USD is trading at 1.03113, down 0.07%, as the pair maintains a bearish outlook below the pivot point at 1.03231. On the 4-hour chart, immediate resistance is located at 1.03716, with a stronger hurdle at 1.04590. Conversely, immediate support lies at 1.02219, with the next level at 1.01682, suggesting a potential downside if the bearish momentum persists.

The 50 EMA at 1.03598 aligns with short-term resistance, while the 200 EMA at 1.04710 reinforces a broader bearish sentiment. The RSI is neutral, indicating limited momentum in either direction.

A break above 1.03231 could trigger bullish activity, while staying below this level keeps bears in control, with a focus on testing the 1.02219 support.