Weekly Dollar Forecast Summary
- USD Outlook: Bearish
- Fed Policy: 0.25% rate cut expected on Oct 29
- Top FX Pairs to Watch: EUR/USD, GBP/USD, USD/JPY
- Risks: U.S. government shutdown, Fed pivot, BOJ intervention
Why Is the US Dollar Falling This Week?
The US Dollar (USD) remains under heavy selling pressure as we close out October 2025. With a prolonged U.S. government shutdown stretching into its fifth week, key economic data remains frozen, eroding investor confidence and clouding visibility into inflation and employment trends.
The upcoming FOMC meeting on October 29 is expected to deliver another 0.25% rate cut, reinforcing the dollar’s bearish outlook. Short bursts of USD strength—such as on renewed U.S.–China trade tensions—have proven short-lived.
Key Drivers Behind USD Weakness
Government Shutdown: Data Vacuum
The shutdown, now 27+ days in, has paused most federal economic reporting. While September’s Consumer Price Index (CPI) was released late, critical data like jobs figures remain delayed. This uncertainty is keeping the market “flying blind” and pushing traders away from the dollar.
Labor Market Cracks Emerging
- Private payrolls declined by 32,000 in September – the worst drop since 2023.
- Consumer sentiment hit a 5-month low in October.
- Jobless claims are trending upward.
These signs signal a slowing economy and raise expectations for a more dovish Federal Reserve.
Fed Rate Cuts Fully Priced In
Markets are locked in on rate cuts this week and another by December. Even with inflation hovering around 3%, the Fed has pivoted toward easing, as seen in recent FOMC minutes. Unless a major inflation surprise hits, U.S. yields will remain capped, keeping the dollar on the defensive.
Global Inflation Divergence
- Eurozone CPI at ~2.2% aligns with ECB targets.
- UK inflation remains sticky at 3.8%, but hasn’t worsened.
In contrast, the U.S. appears more dovish, widening rate differentials and boosting demand for the EUR and GBP against the dollar.
Trade Tensions and Volatility
President Trump’s tariff threats on China have rattled markets but failed to lift the USD. While some investors seek short-term safety in USD during volatility, the broader trend remains bearish unless a severe global crisis hits.
Weekly Forex Forecast – Key Currency Pairs
EUR/USD – Bullish Momentum Builds
- Range: 1.1600 – 1.2000
- Bias: Mildly Bullish
- Resistance: 1.1830
- Support: 1.1600
Eurozone economic strength and a dovish Fed keep EUR/USD pushing higher. A clean break above 1.1830 could send the pair toward 1.20. If the Fed surprises dovishly this week, expect a bullish breakout.
GBP/USD – Gains Capped by UK Budget Uncertainty
- Range: 1.3300 – 1.3800
- Bias: Cautiously Bullish
- Resistance: 1.3660–1.3700
- Support: 1.3300
Sterling benefits from USD softness, but UK fiscal policy concerns are capping gains. A market-friendly Autumn Budget could push GBP/USD beyond the 1.37 level—but without it, upward momentum will be limited.
USD/JPY – BOJ Intervention Watch
- Range: ¥145.00 – ¥155.00
- Bias: Bearish USD / Bullish JPY
- Trigger Level: ¥155.00
The yen may soon strengthen if Japan intervenes in FX markets. Traders eye ¥155 as a red line. The BOJ’s Oct 30 meeting could bring policy tweaks, while a dip below ¥150 could signal a trend reversal.
USD/INR – Rupee Still Under Pressure
- Range: ₹88.00 – ₹89.00
- Bias: Bearish INR
- Support: ₹88.00
- Resistance: ₹89.00
Despite RBI intervention, the rupee faces persistent downside from trade deficits, capital outflows, and stronger oil prices. If USD/INR rises back toward ₹89, further central bank action is likely.
DXY – Dollar Index Still Trending Lower
- Current Level: ~98.8
- Support: 97.00
- Resistance: 99.00
- Bias: Bearish
The US Dollar Index (DXY) remains locked in a downtrend. Rate cut expectations, weak U.S. data, and shutdown risks have prevented any sustained rallies. A break below 97 could accelerate losses unless a major event drives risk-off flows.
Key Events to Watch (Oct 29 – Nov 3)
| Date | Event | Importance |
|---|---|---|
| Oct 29 | Fed Rate Decision (FOMC) | High – Rate cut likely |
| Oct 30 | Bank of Japan Meeting | High – Watch for intervention talk |
| Oct 31 | Eurozone CPI Flash (Oct) | High – Could move EUR/USD |
Quick Technical Summary
| Pair | Bias | Support | Resistance | Key Driver |
|---|---|---|---|---|
| EUR/USD | Mildly Bullish | 1.1600 | 1.1830 | ECB–Fed divergence |
| GBP/USD | Cautiously Bullish | 1.3300 | 1.3660 | UK fiscal uncertainty |
| USD/JPY | Bearish USD / Bullish JPY | ¥145.00 | ¥155.00 | Intervention risk |
| USD/INR | Bearish INR | ₹88.00 | ₹89.00 | Trade/oil & RBI action |
| DXY | Bearish | 97.00 | 99.00 | Fed easing bias |
FAQs – Dollar & Forex Predictions This Week
Will the USD Rate Increase Next Week?
Unlikely. Unless a global shock triggers safe-haven flows, the USD is expected to stay weak due to Fed policy easing and political dysfunction.
Can EUR/USD Reach 1.20?
Yes – if EUR clears the 1.1830 barrier and the Fed turns even more dovish, the next target is 1.20.
Is GBP/USD Going to Hit 1.38?
Unlikely in the short term. Without a positive UK budget surprise or a major USD plunge, GBP/USD may stay capped below 1.37.
Will Japan Intervene to Boost the Yen?
High risk. A move above ¥155 could trigger action from Tokyo. Traders should brace for sudden JPY strength.
Final Word: The Dollar’s Bearish Slide Looks Set to Continue
The macro backdrop continues to weigh on the dollar. Rate cut bets, shaky U.S. data, and political paralysis all point toward continued USD softness. Unless a dramatic global risk-off shock hits, don’t expect the dollar to bounce meaningfully this week.
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