US Dollar Forecast: Pressure Mounts Ahead of NFP, Trump Fed Comments Stir Market – GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) slipped to 97.00 during Monday’s Asian session, down 0.35% on the day. The decline follows weak US economic data and growing expectations that the Federal Reserve may cut rates as early as September.

Soft Spending Data Shifts Focus to NFP

Friday’s data showed personal spending fell unexpectedly in May, marking its second decline this year. Personal income dropped by 0.4%—the sharpest monthly decline since September 2021.

The market now anticipates a slower June Nonfarm Payrolls report, with just 110,000 new jobs projected versus 135,000 in May. Unemployment is expected to tick up to 4.3%, reinforcing dovish policy expectations.

Trump’s Fed Criticism and Trade Comments Weigh on Sentiment

In a pre-recorded Fox News interview, former President Trump criticized the Fed’s handling of rising debt costs, urging lower interest rates. He also renewed criticism of Japan’s trade policies, arguing that Japan should import more US oil and autos to balance trade.

Combined, the weak economic data, dovish policy bets, and rising trade uncertainty are contributing to a bearish short-term outlook for the dollar.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near 97.12, struggling to recover from last week’s steep drop. Price remains trapped below both the 50 EMA (97.57) and 200 EMA (98.32), reflecting persistent downside pressure. A descending trendline reinforces bearish structure, while the index continues to post lower highs and lower lows.

The 0.236 Fibonacci retracement level at 97.27 acts as immediate resistance, with repeated rejections around this zone. A break below 96.98 could open the door toward 96.70 and 96.44, while any upside attempt remains limited unless DXY reclaims 97.74. For now, the bearish momentum remains intact below 97.45.

GBP/USD Technical Analysis

GBP/USD is consolidating just below 1.3730 after a strong rally from the 1.3559 low. Price action has carved out a symmetrical triangle on the 2-hour chart, with converging trendlines highlighting indecision. The 50 EMA at 1.3671 and 200 EMA at 1.3566 remain supportive, indicating bullish structure intact.

A breakout above 1.3769 would confirm bullish continuation, targeting 1.3812 and 1.3859 next. On the flip side, a drop below 1.3683 support would weaken momentum and expose 1.3593.

The tight range suggests a breakout is imminent. Traders should watch for high-volume confirmation to signal direction. Bias remains bullish while price holds above the 50 EMA.

EUR/USD Technical Forecast

The EUR/USD pair is holding firm near 1.1724, supported by a rising channel that’s been in place since June 22. Price continues to trade comfortably above the 50 EMA at 1.1669 and the 200 EMA at 1.1549, signaling a strong short-term bullish trend. Recent consolidation around 1.1720–1.1750 suggests a pause, not a reversal.

If buyers break above 1.1753, the next resistance zones lie at 1.1782 and 1.1817. On the downside, 1.1698 remains a key level to watch. A break below this support could shift momentum and attract sellers.

Until then, the path of least resistance remains upward, supported by consistent higher lows and bullish structure.