**US Dollar Price Forecast: Under Pressure Ahead of NFP; GBP/USD and EUR/USD Analysis**
*Based on article by James Hyerczyk, FXEmpire*
The US dollar enters a crucial phase this week, under pronounced pressure as traders brace for the non-farm payrolls (NFP) employment report. Much of the currency’s recent turbulence can be attributed to shifting expectations for Federal Reserve policy, economic data surprises, and evolving global trade conditions. The greenback’s trajectory has direct implications for major currency pairs, particularly GBP/USD and EUR/USD, which have been marked by their own volatility against a backdrop of diverging economic fundamentals in the US, Europe, and the UK.
This in-depth analysis explores the drivers behind the dollar’s recent performance, expectations ahead of the NFP release, and the technical and fundamental outlooks for GBP/USD and EUR/USD. The insights are grounded in the analysis provided by James Hyerczyk for FXEmpire, expanded with additional context to provide a comprehensive view for Forex market participants.
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### **US Dollar: Pressed by Policy Speculation and Economic Signals**
The US Dollar Index (DXY), which tracks the greenback against a basket of major currencies, has seen renewed weakness. The drop from multi-week highs comes as market sentiment shifts in response to:
– **Weaker-than-expected US economic data**, especially from the labor market and consumer sectors.
– **Shifting expectations around the Federal Reserve’s monetary policy path**, with speculation increasing over potential rate cuts later in 2024.
– **Rising global risk appetite**, typically benefiting risk-linked currencies at the expense of the safe-haven dollar.
– **Political headlines and trade uncertainties** affecting broader sentiment.
**Key Data Influencing the Dollar:**
– **US ISM Manufacturing and Services PMI figures** came in below expectations, suggesting cooling activity.
– **Jobless claims** have edged higher, raising concerns about labor market resilience ahead of NFP.
– **JOLTS job openings data** pointed to moderation in labor demand.
– **Fed commentary** remains mixed, yet the prevailing theme is one of caution, with uncertainty about the timing of any rate adjustment.
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### **All Eyes on Non-Farm Payrolls (NFP)**
The upcoming NFP report is the single most crucial data release for the dollar in the immediate term. Non-farm payrolls serve as a bellwether for US economic momentum and directly anchor expectations for monetary policy action.
**Market expectations ahead of the release:**
– **Job creation is forecast to slow**, with consensus estimates in the range of 180,000 to 200,000, down from previous months.
– **Unemployment rate** is anticipated to hold steady or tick marginally higher.
– **Wage growth figures** will be closely watched, as robust earnings gains could stoke inflation fears and complicate the case for cuts.
**How NFP Could Affect the Dollar:**
– **Stronger-than-expected jobs data** would reduce the urgency for near-term Fed easing, supporting the dollar and raising the prospect of further gains.
– **Weaker-than-expected figures** would increase bets on rate cuts, fueling further dollar weakness and boosting its main rivals.
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### **Technical Picture: US Dollar Index (DXY)**
On the technical front, the DXY currently sits at a crossroads. The retreat from recent highs points to a loss of bullish momentum, but the longer-term uptrend remains tentatively intact unless key support levels are breached.
– **Immediate support** is eyed near 104.00-104.20; a break below this region may open the door for steeper declines toward 103.50 or even 103.00.
– **Resistance** is visible at 105.00, with a concerted move above this threshold needed to reestablish upside momentum.
– **Momentum indicators** such as the RSI suggest the index is neither overbought nor oversold, but
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