US Dollar Price Forecast: Soft NFP Hits Fed Bets, Can GBP/USD and EUR/USD Recover?
Published: October 5, 2026
Author: Arslan Ali
Key Highlights
- U.S. payrolls rose by only 29,000 in September, with unemployment increasing to 4.2%, leading to reduced expectations for an October Federal Reserve rate hike.
- The U.S. Dollar Index (DXY) remains technically bullish above 101.76, with potential resistance levels at 102.49, 102.70, and 102.95.
- EUR/USD has broken below the 1.1225 support level, with 1.1090 as the next significant downside target.
Market Analysis
The latest employment data from the U.S. showed a significant slowdown, with nonfarm payrolls increasing by just 29,000, which is well below market expectations. This has led traders to adjust their forecasts regarding the Federal Reserve's monetary policy, particularly concerning a potential rate hike in October. Despite the disappointing jobs report, U.S. yields remain elevated, which continues to support the dollar's strength.
Dollar Index Overview
The DXY is currently trading at 102.18, showing bullish interest near the rising trendline and the 50-period moving average. A break above 102.49 could lead to further gains towards 102.70 and 102.95. Conversely, if it falls below 101.76, the next support levels to watch would be 101.49 and 101.16.
GBP/USD Analysis
GBP/USD is currently around 1.3230, having bounced from the 1.3180 support level. However, it continues to trade below both moving averages and a descending trendline, indicating a bearish bias. Resistance is noted at 1.3250, and a break above this could lead to targets at 1.3294 and 1.3339. The first key support remains at 1.3180, with further declines potentially reaching 1.3147 and 1.3116.
EUR/USD Analysis
EUR/USD is trading at 1.1200, having broken below the 1.1225 support level. The next support level is at 1.1090, and if this is breached, lower prices around 1.0945 could be expected. Resistance levels are at 1.1225 and 1.1331. The Relative Strength Index (RSI) indicates oversold conditions, suggesting a potential bounce, but the bearish trend remains intact as long as prices stay below the descending trendline.
Conclusion
The current economic indicators suggest a cautious outlook for the U.S. dollar, with soft labor market data impacting Fed rate hike expectations. However, elevated yields continue to support the dollar's strength. Traders should monitor key resistance and support levels in GBP/USD and EUR/USD as market conditions evolve.