US Dollar Forecast: DXY Consolidates Before Fed’s Jackson Hole, GBP/USD and EUR/USD

Market Overview

During Asian trading on Monday, the US Dollar Index (DXY) held flat around 97.85 as investors awaited major political developments and the Federal Reserve’s Jackson Hole symposium later this week.

Dollar Holds Ground Amid Geopolitical Uncertainty

Markets focused on upcoming talks between US President Donald Trump and Ukrainian President Volodymyr Zelenskiy, following Trump’s recent discussions with Russia’s Vladimir Putin.

Reports suggest Trump pressed for a quick settlement, raising concerns over Ukraine’s negotiating position. Traders remain cautious, as any sign of tension or stalled progress could revive safe-haven demand, potentially strengthening the dollar.

Mixed US Data Adds Pressure on the Greenback

Recent US Retail Sales data showed a 0.5% increase in July, easing from June’s 0.9% gain. Yearly sales rose 3.9%, down from 4.4%. Meanwhile, consumer sentiment softened, with the Expectations Index slipping to 57.2 in August.

Inflation forecasts ticked higher, with one-year expectations rising to 4.9% and five-year to 3.9%, reinforcing concerns over persistent price pressures.

Markets Eye Fed’s Next Move at Jackson Hole

Despite its stability, the DXY faces downside risks as investors ramp up bets on policy easing. The CME FedWatch Tool shows a 93% probability of a September rate cut, with markets also pricing in potential reductions in October and December.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is consolidating near 97.87, trading within a tightening triangle formation that reflects indecision. Price remains capped below the 50-EMA at 97.99 and the 100-EMA at 98.15, keeping short-term momentum tilted bearish.

Repeated rejections from the 98.30–98.40 zone highlight the presence of strong overhead resistance. On the downside, support rests at 97.62, followed by 97.20, levels that have previously contained declines. The RSI at 46 signals neutral momentum, showing neither overbought nor oversold conditions.

A breakout above 98.63 would strengthen bullish sentiment, opening the path toward 98.99, while a failure to hold current support may extend the corrective structure, exposing the 97.20–97.00 region. Market direction hinges on the next decisive move.

GBP/USD Technical Analysis

The GBP/USD pair is trading near $1.3547, consolidating within a well-defined ascending channel. Price continues to hold above the 50-EMA at $1.3485 and the 100-EMA at $1.3455, reinforcing bullish momentum. Immediate resistance is noted at $1.3592, with further upside potential toward $1.3652 and $1.3711 if buyers sustain momentum.

On the downside, initial support lies at $1.3518, aligned with the lower boundary of the channel, while a break below could expose deeper levels at $1.3455 and $1.3397.

EUR/USD Technical Forecast

The EUR/USD pair is consolidating near $1.1699, holding above its rising trendline support. The 50-EMA at $1.1678 and 100-EMA at $1.1657 are aligned just below price, reinforcing a bullish short-term bias. Immediate resistance is seen at $1.1731, followed by $1.1785, where recent rallies stalled. On the downside, key support lies at $1.1632, a level that, if broken, could expose $1.1588.

The RSI at 55 shows moderate bullish momentum, leaving room for further upside without being overextended. As long as the price holds above the trendline and moving averages, buyers retain control.

However, failure to break through $1.1731 may trigger a pullback toward support, keeping the pair range-bound within current levels.