U.S. Dollar Retreats as Tariff Concerns Mount – Analysis For EUR/USD, GBP/USD

Market Overview

The U.S. Dollar Index (DXY) is hovering near $99.60, extending its decline for a second day, even after a stronger-than-expected Nonfarm Payrolls (NFP) report.

In April, the U.S. economy added 177,000 jobs—well above the 130,000 forecast—while the unemployment rate held steady at 4.2%.

Average hourly earnings rose 3.8% year-over-year, matching March’s growth. Ordinarily, such data would support the dollar by reinforcing confidence in the labor market. But broader macro forces are overshadowing the jobs numbers.

Tariff Policy and Rate Cut Expectations Undermine Sentiment

Investor sentiment has been rattled by President Trump’s announcement of a 100% tariff on foreign-produced films. This move has reignited fears over protectionist trade policies at a time when global demand remains uneven.

While Trump confirmed he won’t replace Fed Chair Jerome Powell before May 2026—offering some political clarity—markets remain cautious.

Treasury Secretary Janet Yellen added to concerns, warning the new tariffs could dampen U.S. growth. With rising expectations of Federal Reserve rate cuts later this year, the dollar continues to face mounting headwinds.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near $99.81, pivoting around a key zone that’s acted as both resistance and support. Price is hovering just above the rising trendline and the 50 EMA ($99.74), signaling buyers are still defending the short-term uptrend.

The 200 EMA looms above at $100.11, limiting bullish momentum. Immediate resistance stands at $100.27, followed by $100.63. On the downside, support lies at $99.40 and $98.90.

DXY remains range-bound with cautious bullish bias as long as it holds above $99.40. A close above $100.27 could shift sentiment more decisively.

GBP/USD Technical Analysis

Sterling is hovering near $1.3285, caught between conflicting technical signals. Price is sandwiched just below the 50 EMA at $1.3311 and holding slightly above the 200 EMA at $1.3252, suggesting indecision.

The pair continues to struggle at the $1.3300 pivot—a key battleground zone reinforced by prior price congestion. Immediate resistance stands at $1.3311, with the next upside barrier at $1.3378.

On the downside, watch for support near $1.3249 and $1.3202. Unless bulls clear $1.3311 convincingly, the path of least resistance leans lower toward $1.3249 and $1.3202. Momentum remains fragile.

EUR/USD Technical Forecast

The euro is consolidating just above $1.1325 after failing to sustain a push through the $1.1345 resistance zone, which also aligns with a descending trendline.

Price is sandwiched between the 50 EMA at $1.1333 and the 200 EMA at $1.1289, reflecting short-term indecision. Immediate resistance sits at $1.1345, with the next hurdle at $1.1423. Support is holding at $1.1264, while a deeper base lies at $1.1209.

A break below the 200 EMA would tilt momentum bearish. A breakout above $1.1345 could trigger upside toward $1.1423, but the euro must hold $1.1289 to avoid renewed selling pressure.