US Dollar Forecast: Falls on Tariff Deadline Jitters, Fed Scrutiny Weighs – GBP/USD and EUR/USD

Market Overview

In early Asian trading, the US Dollar Index (DXY) hovered around $97.90 after slipping over 0.5% in the prior session. The index remains under pressure as investors weigh the potential impact of new trade tariffs.

US Commerce Secretary Howard Lutnick confirmed in a recent interview that tariff hikes will take effect on August 1, regardless of ongoing negotiations. This firm stance has increased trade uncertainty and added headwinds for the greenback.

Fed Independence Under Scrutiny

Tensions around the Federal Reserve’s role are also growing. Treasury Secretary Scott Bessent raised concerns about the central bank’s expanding involvement beyond monetary policy.

He called for a full review of the Fed’s responsibilities, warning that unchecked “mandate creep” could erode its independence.

Political Pressure Mounts on Fed Leadership

Meanwhile, former President Donald Trump renewed criticism of Fed Chair Jerome Powell for not cutting rates quickly enough. Although Trump denied reports of Powell’s potential removal, speculation persists.

Separately, Rep. Anna Paulina Luna has accused Powell of lying under oath regarding the Federal Reserve’s headquarters renovation, adding further uncertainty to the Fed’s leadership.

Together, tariff deadlines and heightened political scrutiny of the Fed are clouding outlooks for US monetary policy, weighing on sentiment toward the dollar.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is under pressure, trading near 97.87 after slipping below its 100-EMA ($98.10) and facing strong resistance at 98.62. A recent downtrend has formed, with sellers defending the descending trendline and the 50-EMA near $98.19.

The index briefly stabilized at the 97.80 support zone but remains vulnerable amid weakening macro sentiment. Real yields have softened and Fed rate pause expectations are rising, limiting demand for the dollar.

If DXY fails to reclaim the $98.10 level, downside risks grow toward $97.55 and $97.27.

GBP/USD Technical Analysis

The GBP/USD pair is attempting to hold above the key $1.3470 support after briefly breaching a descending trendline. Price is currently testing the 100-EMA at $1.3471, with the 50-EMA below at $1.3451, both now acting as near-term dynamic support.

A sustained move above $1.3500 could confirm bullish continuation, targeting the next resistance at $1.3525 and $1.3571. However, failure to stay above $1.3470 may send the pair back toward the ascending trendline support at $1.3425.

Overall, the pound’s short-term outlook hinges on holding this breakout zone, with dollar weakness and improving UK macro data providing fundamental support. Traders are watching for a clean push through $1.3525 to confirm trend reversal strength.

EUR/USD Technical Forecast

The EUR/USD pair is regaining strength, trading at $1.1700 after bouncing from key support at $1.1654. The pair has reclaimed both the 50-EMA ($1.1653) and 100-EMA ($1.1659), signaling renewed bullish sentiment. Price action has carved out a rising channel, with short-term resistance seen at $1.1720.

A breakout above this level could pave the way for $1.1750 and $1.1782. The pair’s recovery reflects the broad weakness of the U.S. dollar amid cooling rate hike expectations and soft macroeconomic data.

As long as EUR/USD holds above $1.1680, momentum may stay in favor of buyers. However, a drop below $1.1650 would invalidate the bullish structure and shift focus back to $1.1613 and $1.1579 support zones.