US Dollar Price Forecast: Gains Ahead of NFP Release

Published: January 09, 2026

Key Points

• The US dollar is approaching 99.00 as traders prepare for the Nonfarm Payrolls (NFP) report, with expectations of a slower labor market.
• NFP is projected to show a job gain of 60,000, down from 64,000 in November, which supports the Federal Reserve's pause on interest rate changes.
• The US Dollar Index (DXY) is trading within a rising channel, indicating strength without reaching overbought conditions.

Market Overview

The US dollar has extended its two-day winning streak, trading around 98.90 and reaching an intraday high of 99.00. This strength is attributed to cautious market sentiment ahead of the NFP report, which is expected to provide insights into labor market conditions and the Fed's future policy direction. The forecast for NFP indicates a decrease in job gains, reinforcing expectations that the Fed will maintain current interest rates during its January meeting.

US Dollar Strength Amid Mixed Labor Data

Recent labor reports present a mixed picture. Initial Jobless Claims rose slightly to 208,000, which is lower than expected but higher than the previous week. Additionally, the number of individuals receiving unemployment benefits increased to 1.914 million. The ADP report indicated that private payrolls added only 41,000 jobs in December, falling short of expectations, while job openings decreased to 7.146 million in November.

Despite these mixed signals, the US dollar is gaining strength as the market anticipates the Fed will keep rates steady, which supports the currency amid a cooling labor market.

Technical Analysis of the US Dollar Index (DXY)

The DXY is currently trading near 99.07, continuing its recovery within a rising channel established since late December. The price is above short-term moving averages, with the 200-period MA acting as a medium-term pivot near 98.50. The upward trendline suggests a bullish structure, with former resistance around 98.85 now serving as support. The RSI is in the mid-to-high 60s, indicating strength without extreme conditions.

GBP/USD Technical Analysis

GBP/USD is trading near 1.3410, having pulled back after failing to maintain momentum above the 1.3550–1.3570 resistance area. The pair is testing the 200-period MA near 1.3440, which is crucial for short-term direction. The candles indicate limited follow-through in selling pressure, with the RSI just above 40, suggesting fading bullish momentum.

EUR/USD Technical Forecast

EUR/USD is trading around $1.1643, continuing its pullback after failing to hold above the $1.1770–$1.1800 resistance zone. The price is approaching a rising trendline that has supported the pair since late November. The 200-period MA near $1.1700 has turned into resistance, and the RSI is hovering near 40, indicating weak momentum.

Conclusion

The upcoming NFP report is poised to be a significant market mover, with expectations of slower job growth potentially influencing the Federal Reserve's policy decisions. The US dollar's current strength reflects cautious optimism in the market, while technical indicators suggest a constructive bias as long as key support levels hold.