US Dollar Price Forecast: ISM Services PMI in Focus as DXY Struggles, GBP/USD and EUR/USD

US Dollar Index: Key Data and Events Outlook

The US Dollar Index edged lower following weaker-than-expected economic data. Final Services PMI dropped to 56.8, missing the forecast of 58.5, while Factory Orders declined by -0.4%, reflecting a slowdown in economic activity.

Traders now await key events, including the ISM Services PMI (forecasted at 53.5) and JOLTS Job Openings, to gauge the Fed’s potential policy trajectory.

The upcoming Trade Balance report and remarks from FOMC Member Barkin may further influence the index. Persistent uncertainty around economic growth and Federal Reserve policy keeps the DXY range-bound, with near-term movement likely dictated by upcoming data releases.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at 108.015, down 0.25%, as bearish momentum dominates following a break below the upward channel. The key pivot point at $108.42 is a critical level; staying below it reinforces the bearish bias. Immediate support is at $107.62, with deeper support at $107.14, while resistance lies at $108.91 and $109.52.

The 50-day EMA at $108.34 aligns with the pivot, adding weight to its importance. Meanwhile, the 200-day EMA at $107.19 signals a potential downside target if the selling pressure persists. A recovery above $108.42 could reignite bullish interest, but for now, the index appears poised for further declines as the broader trend shifts lower.

Sterling Struggles Amid Mixed Economic Data Signals

Sterling (GBP) faced mixed sentiment as Final Services PMI fell slightly to 51.1, missing expectations of 51.4. Retail activity improved, with BRC Retail Sales Monitor rising 3.1% y/y, reversing last month’s -3.4%. However, Halifax HPI declined by -0.2%, below the forecasted 0.8%.

Traders now eye Construction PMI, forecasted at 54.3, and Housing Equity Withdrawal data, projected at -£11.5B. The upcoming 30-year bond auction could further influence market direction for the pound.

GBP/USD Technical Analysis

The GBP/USD pair is trading at $1.25537, up 0.32%, as buyers maintain a bullish stance above the pivot point at $1.25029. Immediate resistance is seen at $1.26617, with a stronger cap at $1.27286, where a downward trendline could limit further upside movement.

Support levels are firm at $1.24360 and $1.23623, with a breach below the pivot likely triggering sharper selling pressure.

The 50-day EMA at $1.25103 aligns closely with the pivot, supporting the bullish trend, while the 200-day EMA at $1.26346 adds a layer of resistance. To confirm sustained upside momentum, the pair must break above $1.26617 decisively, though traders should remain cautious of resistance near $1.27286.

Euro Gains Amid Strong Services Data and CPI Focus

The Euro (EUR) showed resilience as German Prelim CPI rose 0.4%, beating forecasts of 0.3%. Spanish Services PMI surged to 57.3, while Italian Services PMI improved to 50.7, crossing the key expansion threshold. French and German PMIs remained steady at 49.3 and 51.2, respectively. Sentix Investor Confidence held at -17.7.

Upcoming CPI data, including Core CPI Flash Estimate at 2.7% and the unemployment rate at 6.3%, will provide further direction for the Euro.

EUR/USD Technical Forecast

The EUR/USD pair is trading at $1.04135, up 0.23%, as buyers attempt to maintain control in a choppy market. On the 4-hour chart, the pair holds above the key pivot point at $1.03728, signaling a cautiously bullish outlook. Immediate resistance lies at $1.04590, followed by a stronger barrier at $1.05229.

On the downside, support levels are seen at $1.03070 and $1.02219, with a break below the pivot potentially triggering sharper declines.

The 50-day EMA at $1.03748 aligns closely with the pivot, reinforcing its importance, while the 200-day EMA at $1.04868 suggests a ceiling for near-term gains. Traders should monitor a sustained move above $1.04590 to confirm bullish momentum.