US Dollar Forecast: Stays Flat Despite US-China Tariff Delay, GBP/USD and EUR/USD

Market Overview

During the early European session, the US Dollar Index (DXY) remained flat around the 98.50 mark as traders adopted a cautious approach ahead of the much-anticipated US Consumer Price Index (CPI) release for July, scheduled later today.

Market participants are also keeping a close watch on scheduled remarks from Federal Reserve officials Thomas Barkin and Jeffrey Schmid, which could offer fresh cues on the US monetary policy outlook.

Fed Rate Cut Bets Rise Amid Softer US Data and CPI Anticipation

However, the expectations for a September rate cut have surged following weaker US jobs and PMI figures. According to market forecasts, headline CPI is expected to rise 2.8% YoY in July, while core CPI is projected to increase 3.0% YoY.

Hence, the softer-than-expected print could strengthen market conviction for an imminent policy easing, potentially dragging the DXY lower.

Money markets now price in a 90% probability of a September cut, with 58 basis points of total easing anticipated by year-end, equivalent to two quarter-point cuts and a one-in-three chance of a third.

US-China Tariff Delay Fails to Lift the Dollar

Meanwhile, positive trade developments have done little to boost the greenback. US President Donald Trump announced a 90-day delay on implementing sweeping tariffs against China, extending talks just hours before the current agreement’s expiry.

In response, China’s Commerce Ministry stated it would suspend adding certain US firms to its unreliable entity and export control lists for the same period.

Despite easing trade tensions, the muted reaction in DXY suggests traders remain focused on upcoming US inflation data and Fed guidance as the main drivers for the index’s next move.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is consolidating around 98.52, trading just above its 50-EMA ($98.42) and 100-EMA ($98.50). Price action is hovering near a short-term ascending trendline, with resistance at 98.80–99.07 in focus.

A breakout above 99.07 could pave the way toward 99.53, while a rejection may send the index back toward 98.00 or even 97.83. The RSI at 57 shows moderate bullish momentum, but upside potential remains capped unless buying volume strengthens.

GBP/USD Technical Analysis

GBP/USD is trading at 1.3449, supported by an ascending trendline and the 50-EMA (1.3408) and 100-EMA (1.3383). The pair is approaching the 1.3475 resistance level, a breakout above which could pave the way toward 1.3524 and 1.3587.

Immediate support is at 1.3400, with deeper pullback potential toward 1.3344 if the trendline fails. The RSI at 58 indicates mild bullish momentum but shows signs of flattening, suggesting consolidation before a decisive move.

Price action over the next sessions will hinge on whether bulls can sustain momentum above the trendline or face rejection near resistance.

EUR/USD Technical Forecast

The EUR/USD is trading at 1.1621, just under its 50-EMA (1.1624) and 100-EMA (1.1613), while testing a descending trendline from late July highs. Immediate resistance lies at 1.1698, with further upside potential toward 1.1778 if bulls manage a breakout.

On the downside, support is set at 1.1567, followed by 1.1503. The RSI at 46 suggests neutral momentum, leaning bearish after a recent rejection from trendline resistance.

Price action over the next sessions will hinge on whether the pair can reclaim the 1.1650–1.1700 zone or slip toward mid-term support levels.