U.S. Dollar Consolidates as Traders Eye Fed Speeches – Analysis for EUR/USD, GBP/USD

Market Overview

The US Dollar Index (DXY) is consolidating near $100.39 after reaching a nearly one-month high on Friday. This level marks a critical point in the index’s recovery from multi-year lows seen in April, as it heads for a third consecutive week of gains.

Traders are closely watching the index’s next move, driven by central bank signals and trade dynamics.

Fed Signals Caution, Supports Dollar

Federal Reserve Chair Jerome Powell’s recent comments suggest the Fed is in no rush to cut rates, despite ongoing economic uncertainties. Powell emphasized the need for clearer trade signals before adjusting policy, providing a steady backdrop for the dollar.

This cautious tone, combined with a more optimistic US-UK trade outlook, has eased recession concerns, supporting the dollar’s resilience.

Geopolitical Tensions Add to Dollar Demand

Rising geopolitical risks, including tensions in Eastern Europe, the Middle East, and South Asia, have also boosted the dollar’s safe-haven appeal.

This support comes as traders await upcoming Federal Open Market Committee (FOMC) speeches for further policy direction.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading around $100.39 on the 2-hour chart, retreating from a recent high of $100.79. The index has pulled back after testing the upper boundary of a rising channel, with immediate support at $100.27, which also serves as a critical pivot point.

If this level holds, the DXY could attempt another push toward the next resistance at $100.79, followed by a more substantial barrier at $101.27. However, a break below $100.27 could expose the index to deeper losses, with immediate support at $99.91 and a more significant floor around $99.62.

The DXY faces a critical test at $100.27, with a break above $100.79 needed to confirm a stronger recovery, while a drop below $99.91 could signal a deeper correction.

GBP/USD Technical Analysis

The GBP/USD is trading around $1.3264 on the 2-hour chart, rebounding from a key support zone near $1.3220, which has acted as a strong demand area in recent sessions. The pair has found immediate resistance at $1.3299, where the 50 EMA is also converging, creating a critical hurdle for further gains.

If buyers can clear this level, the next resistance stands at $1.3344, followed by a more substantial barrier at $1.3403.

On the downside, a failure to hold above $1.3220 could expose the pair to a retest of $1.3184, potentially extending to $1.3141 if selling pressure intensifies.

GBP/USD is testing a key support zone around $1.3220. A break above $1.3299 could signal a stronger recovery, while a drop below $1.3220 risks deeper losses toward $1.3184.

EUR/USD Technical Forecast

The EUR/USD is trading around $1.1253 on the 2-hour chart, recovering from a recent low near $1.1212. The pair has bounced off a critical support zone, aligning closely with the $1.1212 level, which has acted as a key psychological floor.

The immediate resistance sits at $1.1271, where the price is currently testing a minor breakout. If bulls can clear this level, the next target is $1.1321, followed by a more substantial barrier at $1.1373. However, failure to hold above $1.1271 could expose the pair to a retest of $1.1212, with deeper support around $1.1168.

EUR/USD faces a critical test at $1.1271, with a breakout potentially opening the path to $1.1321, while a drop below $1.1212 risks a deeper pullback to $1.1168.