Title: US Dollar Technical Forecast: Rebound Halted at Key Resistance Level
Source: Adapted and expanded from the original article by James Stanley on Forex.com, August 8, 2025.
Overview
The US Dollar (USD) attempted a rebound this week amid evolving macroeconomic signals, but the rally faced stiff resistance at a significant technical level. As traders prepare for more economic data releases and central bank comments, dollar strength is once again in question with technical patterns suggesting potential weakness ahead. This article explores the key factors impacting the dollar’s movement, analyzes major USD currency pairs, and lays out important support and resistance levels that traders should be watching closely.
Key Takeaways
– The US Dollar Index (DXY) rebounded but failed to break above the 103.50 resistance level.
– Inflation and labor market data continue to drive volatility in currency markets.
– Major USD pairs such as EUR/USD, GBP/USD, and USD/JPY are developing critical technical patterns.
– The Federal Reserve remains data-dependent, making upcoming economic indicators crucial.
US Dollar Index (DXY) Technical Outlook
The US Dollar Index saw a modest rebound following a spate of strong labor and housing data, but bullish momentum faded at a familiar resistance level near 103.50. A deeper look at the technical structure highlights a potential inflection point in the dollar’s short- to medium-term trend.
Technical Highlights:
– Resistance persisted at the 103.50 level, which was also the Fibonacci retracement of the June decline.
– Daily RSI shows waning bullish momentum, indicating a possible shift toward consolidation or a downward move.
– A clean rejection at resistance hints at a potential return to support around 102.00, with a deeper pullback targeting the 100.80–101.00 range.
The current technical situation reflects a market unsure of long-term direction, reliant upon fresh economic data to spark a decisive breakout or breakdown for the greenback.
Fundamental Factors Behind USD Volatility
The US Dollar’s recent moves have been heavily influenced by macroeconomic variables, especially inflation expectations, labor market strength, and interest rate policy. The Federal Reserve’s stance remains largely data-dependent, meaning traders must place increased emphasis on high-impact data releases.
Recent Economic Drivers:
– July Nonfarm Payrolls came in below expectations, posting 187,000 new jobs versus the forecast of 200,000, suggesting softness in the labor market.
– The unemployment rate fell slightly to 3.5%, indicating that while job growth may be cooling, the labor market remains historically strong.
– CPI inflation for July rose 0.2% month-over-month, reflecting continued deceleration from the highs seen in 2022.
– PPI inflation data indicated softening input prices, providing further evidence of easing supply-side pressures.
Upcoming Events to Watch:
– US Consumer Price Index (CPI) – August inflation data could provide clues about future monetary tightening or easing.
– Retail Sales – An important barometer for consumer demand and overall economic health.
– Federal Reserve’s Jackson Hole Symposium – Key speeches by Fed Chair Powell and other policymakers may offer forward guidance.
Major Currency Pairs – Technical Analysis
EUR/USD: Bullish Momentum Stalls
Following an aggressive sell-off into mid-July, EUR/USD staged a relief rally, which topped out near 1.1050 before running into resistance once again. The failure to sustain gains above the 1.10 psychological level signals growing risk for a reversal.
Key Technical Levels:
– Resistance: 1.1050 – 1.1100 zone remains a key ceiling for bulls.
– Support: 1.0875 has held firm recently, with a break below opening the door to 1.0780 and possibly deeper.
– RSI divergence on daily charts signals waning bullish momentum.
Watch for consolidation between 1.09 and 1.11 unless further directional cues arise from economic data.
GBP/USD: Attempting Breakdown Below Support
The British
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