US Dollar Forecast: DXY Slips as Trump’s 25% Tariff Threat Hits Sentiment – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) slipped to 97.25 during Tuesday’s Asian session, pulling back from Monday’s 1% gain. The retreat reflects a shift in sentiment as markets react to growing global trade tensions, renewed expectations for a Fed rate cut, and President Trump’s intensified stance against BRICS-aligned nations.

Tariff Pressures Undermine Dollar Strength

Monday’s dollar rally was fueled by the announcement of new tariffs targeting several U.S. trading partners. Although implementation is delayed until August 1, countries such as Japan, South Korea, and Malaysia now face 25% tariffs. Higher rates—up to 40%—have been applied to others, including South Africa, Indonesia, and Cambodia.

Trump further warned that any country supporting BRICS would face an additional 10% levy.

Although initially supportive of the dollar, these measures have raised concerns about retaliation and broader economic repercussions, eroding long-term confidence in the greenback.

Fed Outlook and Domestic Risks Cap Gains

Despite strong jobs data last week, markets remain focused on the Federal Reserve’s policy path. Many expect rate cuts later this year, which could limit further dollar upside.

Ongoing fiscal strain and trade uncertainty continue to present headwinds for the DXY in the near term.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is currently trading around 97.25 after failing to hold above the 200-day exponential moving average (EMA) at 97.26 and retreating from intraday highs of 97.60. Despite the recent bullish breakout from the ascending triangle formed on July 1, DXY is struggling to maintain momentum near the 97.40–97.60 resistance area, which is further reinforced by a descending trendline from the June highs.

The price briefly pierced above this zone but has since faced selling pressure. A close above 97.66 is needed to confirm a breakout and open the door toward 97.90 and 98.19.

On the downside, the rising trendline around 97.07 and horizontal support at 96.88 are key levels to watch. A breakdown below these could send DXY back toward 96.69.

GBP/USD Technical Analysis

GBP/USD is trading at 1.3642, approaching the apex of a symmetrical triangle pattern on the 1-hour chart. The pair is testing the upper boundary of this consolidation zone, with the 50-EMA at 1.3630 acting as immediate resistance.

A confirmed breakout above the 200-EMA at 1.3645 could trigger a bullish move toward the next resistance at 1.3681 and potentially 1.3715. However, failure to breach this confluence may keep the pair trapped, with downside support seen at 1.3627, followed by 1.3585.

EUR/USD Technical Forecast

EUR/USD is attempting a rebound, trading around 1.1756 after bouncing from support near 1.1718. The pair is testing the 50-EMA (1.1746) and pushing toward a descending trendline resistance near 1.1784. A sustained break above this level would confirm a short-term bullish breakout, potentially targeting 1.1810 and 1.1830.

However, failure to breach the trendline could trigger a retest of the 200-EMA at 1.1728 or deeper support at 1.1718 and 1.1688. Overall, traders should closely monitor the 1.1784 area for direction ahead of macroeconomic catalysts, such as the FOMC minutes.