US Dollar Price Forecast: CPI Data Could Delay Cuts – GBP/USD and EUR/USD

Market Overview

During the early European session, the U.S. Dollar Index (DXY) edged higher toward 99.10, buoyed by stronger-than-expected labor data and anticipation ahead of key inflation figures.

The greenback’s rise comes amid a recalibration of expectations for Fed rate cuts and renewed political scrutiny of monetary policy.

Labor Market Resilience Supports Dollar Strength

Nonfarm Payrolls rose by 139,000 in May, outpacing the consensus forecast of 130,000, though slightly below April’s revised figure of 147,000. The unemployment rate held at 4.2%, while average hourly earnings grew 3.9% year-on-year—both marginally above expectations.

These indicators suggest a stable labor market, prompting traders to temper expectations for near-term Fed cuts.

Inflation Print and Political Pressure Loom Large

The upcoming Consumer Price Index (CPI) report, due to be released on Wednesday, is expected to show a 2.5% year-over-year rise in May. A firm print could delay further monetary easing.

Meanwhile, former President Donald Trump publicly urged Fed Chair Jerome Powell to cut interest rates, citing the ECB’s moves and domestic job growth.

Minneapolis Fed President Neel Kashkari emphasized the importance of waiting for clearer data, underscoring the central bank’s cautious stance amid mixed signals and political noise.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near 99.08, struggling to sustain gains below descending trendline resistance. Price action has repeatedly failed to clear the 99.29 resistance zone, reinforcing the broader bearish structure.

Both the 50-EMA (99.02) and 200-EMA (99.38) remain above current levels, capping upside momentum. The rejection at the trendline hints at further weakness, with key downside levels at 98.88 and 98.58 now in focus.

Unless DXY breaks and closes above 99.30, the path of least resistance appears to favor the downside. Bearish pressure is expected to persist as long as the price remains below the confluence of trend and EMA resistance.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3517, having broken below ascending trendline support and the 50-EMA ($1.3543) on the 2-hour chart. This breakdown may signal short-term weakness, especially as price now tests the horizontal support at $1.3501.

A close below this level could open the door toward $1.3474, with the 200-EMA ($1.3481) nearby providing additional downside focus. If buyers reclaim $1.3537, it may suggest a false breakout, shifting the bias back toward $1.3584.

EUR/USD Technical Forecast

EUR/USD is trading near $1.1407, holding just above ascending trendline support that extends from the May 29 low. The pair recently bounced from $1.1397, maintaining its position above the 200-EMA ($1.1359) and flirting with the 50-EMA ($1.1410), which currently caps upside momentum.

Despite recent consolidation, the higher lows pattern remains intact, keeping the bullish structure in place. A clear break above $1.1415 could trigger a push toward resistance at $1.1457, while a drop below $1.1380 would expose the trendline to downside risk.