US Dollar Forecast: NFP Miss, CPI in Focus This Week– GBP/USD & EUR/USD Outlook

US Dollar Forecast: NFP Miss, CPI in Focus This Week– GBP/USD & EUR/USD Outlook

US Dollar Holds Steady as Traders Await CPI Data Following NFP Miss

The US Dollar (DXY) remains stable as traders closely monitor upcoming inflation data following a weaker-than-expected Non-Farm Payrolls (NFP) report. Market expectations for Federal Reserve policy shifts are growing, with the upcoming Consumer Price Index (CPI) release set to be a key driver for the next USD move.

US Jobs Report Sparks Speculation on Rate Cuts

The latest NFP report revealed that the US economy added just 143K jobs in January, falling short of the 169K forecast and sharply lower than December’s 307K gain. However, wage growth remained strong, with Average Hourly Earnings rising 0.5%, exceeding expectations, while the Unemployment Rate unexpectedly dipped to 4.0%. This mixed data suggests a cooling labor market but continued wage pressures, fueling speculation about the Fed’s next steps.

Key Events Ahead: CPI Data and Fed Outlook

The market is now focused on February 12, when the US CPI report is expected to provide further insight into inflation trends. Analysts anticipate a Core CPI reading of 0.3% m/m, with headline CPI holding steady at 2.9% y/y. A higher-than-expected inflation print could strengthen the US Dollar, while a weaker number may accelerate expectations for Fed rate cuts.

Additionally, Federal Reserve Chair Jerome Powell is set to testify before Congress, with investors watching for policy signals. February 13’s Producer Price Index (PPI) and February 14’s Retail Sales data will further shape the inflation outlook and potential market direction.

US Dollar Index (DXY) Technical Analysis

The US Dollar Index is hovering at 108.270, marginally higher by 0.01%. The key pivot point at 108.101 is a crucial support level—holding above it could sustain bullish momentum, while a drop below may trigger selling pressure.

• Resistance Levels: 108.650, 109.028
• Support Levels: 107.822, 107.392
• EMA Levels: The 50-day EMA at 108.019 suggests short-term support, while the 200-day EMA at 108.185 signals consolidation.

GBP/USD Technical Analysis

GBP/USD is trading around 1.24088, with traders awaiting CPI-driven volatility. The pair’s pivot point at 1.24150 remains critical—staying above could support a bullish outlook, while a drop below may encourage further downside.

• Resistance Levels: 1.24900, 1.25502
• Support Levels: 1.23639, 1.22988
• EMA Levels: The 50-day EMA at 1.24307 acts as immediate resistance, while the 200-day EMA at 1.24087 provides support.

EUR/USD Technical Analysis

EUR/USD is trading at 1.03157, down 0.01%, as traders assess the broader market trend. The key pivot point at 1.03489 will determine the next direction, with a break above signaling bullish momentum and a drop below increasing bearish pressure.

• Resistance Levels: 1.04112, 1.04668
• Support Levels: 1.02817, 1.02124
• EMA Levels: The 50-day EMA at 1.03586 and 200-day EMA at 1.03728 indicate resistance ahead, though the broader trend remains intact.

Market Outlook: USD Volatility Expected

With inflation data on the horizon and Fed rate cut speculation intensifying, the US Dollar could see heightened volatility in the coming days. A stronger CPI print may reinforce USD strength, while weaker inflation figures could drive expectations for more aggressive Fed easing, impacting GBP/USD and EUR/USD. Investors should prepare for market swings as economic data and policy signals shape the next move for the greenback.