US Dollar Price Forecast: Falls as ADP and ISM Data Loom

Author: Arslan Ali

Published: January 07, 2026

Key Points

• The US Dollar Index (DXY) has slipped below 98.50 as traders await key economic data.
• Mixed signals from Federal Reserve officials regarding interest rate cuts are contributing to the dollar's weakness.
• The CME FedWatch tool indicates an 82.8% probability of unchanged interest rates in January.

Market Overview

During European trading hours, the DXY fell below 98.50 after a modest gain the previous day. Traders are focused on upcoming US economic data that could influence the Federal Reserve's policy decisions.

Fed Policy Uncertainty

Fed Governor Stephen Miran advocates for more aggressive interest rate cuts, while Minneapolis Fed President Neel Kashkari warns of rising unemployment if the economy slows. Richmond Fed President Tom Barkin emphasizes the need for careful consideration of any rate changes based on economic data. Additionally, the impending appointment of a new Fed Chairman by President Donald Trump adds to the uncertainty surrounding monetary policy.

Upcoming Economic Data

Key reports to watch include the ADP Employment Change and ISM Services PMI for December, expected to show a modest increase in private sector jobs and a stable services sector. The Nonfarm Payrolls (NFP) report on Friday is anticipated to show job gains of 55,000, which could significantly impact market expectations.

Geopolitical Tensions

Despite ongoing geopolitical tensions, such as those between the US and Venezuela, the dollar has not benefited from safe-haven demand. The primary focus remains on the Fed's policy and the upcoming economic reports.

Technical Analysis

US Dollar Index (DXY)

The DXY is currently around $98.58, within a rising channel on the 2-hour chart. Immediate support levels are at $98.50 and $98.15, while resistance is found at $98.85 and $99.07. The RSI indicates a neutral position, suggesting consolidation rather than a reversal.

GBP/USD Analysis

The GBP/USD is trading around $1.3499, having rebounded from an ascending trendline. The trend remains positive as long as it stays above $1.3450, with immediate support at $1.3475 and $1.3415.

EUR/USD Analysis

The EUR/USD is hovering around $1.1685, showing signs of dip buying near a rising trendline. Immediate support is at $1.1660-$1.1650, while resistance levels are at $1.1705 and $1.1755.

Conclusion

The US Dollar is under pressure as traders await critical economic data that could influence the Federal Reserve's policy direction. Mixed messages from Fed officials and geopolitical tensions are contributing to the uncertainty in the market.