US Dollar Price Forecast: Ceasefire Stability Hits Safe-Haven Dollar – Will EUR/USD and GBP/USD Surge?

Dollar Eases Further as Ceasefire Stability Shifts Focus to U.S. Data

The US dollar took another step back on Wednesday as the ceasefire deal with Iran has now held up for month, which has really taken some steam out of people’s need for the dollar as a safe haven. With tanker traffic starting to flow through the strait of hormuz again and no major incidents reported, things are looking a bit more stable globally, which is making investors a bit more willing to take on some risk – and that’s weighing on the dollar.

The euro was looking a bit better on the back of all this improved sentiment and the fact that Europe seems to be getting its energy situation sorted out, while the pound actually gained some ground as one of those currencies that tends to do well when there’s a bit of risk around – you know, that classic “risk on” trade. Both of these currencies are benefiting from the fact that things are looking a bit less dodgy in the world right now, and people are starting to rotate out of the dollar.

Now all eyes are on the US inflation figures due out in the coming days – these are going to give us a much clearer idea of where the Fed is heading. Market players are also keeping a close eye on the ECB and BoE to see if they’re going to start to diverge in terms of interest rates. While the ceasefire has ruled out the dollar’s main source of strength, it’s worth noting that this deal is still pretty fragile – any signs of trouble or a renewed flare up in the middle east could send the greenback shooting back up in a heartbeat.

US Dollar Index (DXY) – Technical Analysis

The US Dollar Index is sitting around $97.83 on the 4 hour chart, having just broken below its red 50 period MA and that key horizontal $98.23 support with those telltale bearish engulfing candles. Price is still respecting that white descending trendline which started all the way back in April, but is at the same time printing lower highs and lower lows. The blue support line at $98.00 hasn’t been able to hold the price up – and that Fib retracement from the recent swing high is suggesting a next downside zone of $97.29-$96.86.

The RSI is now below 45 which is a pretty clear sign of bearish momentum without being over-sold – yet. The volume profile has marked $98.23 as a major resistance level which has now been flipped. As long as price is below $98.60 the structure remains bearish and any rallies are capped by that channel ceiling.

Trade Idea: Consider selling DXY around $97.82, targeting $97.29, with a stop at $98.10.

GBP/USD Holds $1.36 Channel Support – Upside Breakout Setup

GBP/USD is trading at $1.3622 on the 4 hour chart and is still defending that blue ascending trendline – and that red MA confluence just below $1.358. Those green candles have just pushed back lower prices with some higher lows intact after testing that $1.35872 Fib support area. The price action is showing some bullish rejection wicks at the channel floor – and the RSI is holding its own just above 52 with a positive divergence on the 4 hour chart.

There are some clusters of resistance at $1.365-$1.367 which is the recent high. The volume profile is actually confirming that $1.36 is a super strong pivot zone. As long as price is above $1.358 the overall structure is bullish – and it’s still inside that rising channel.

Trade Idea: Consider buying GBP/USD at $1.362 and targeting $1.367 with a stop at $1.358.

EUR/USD Reclaims $1.177 – Bullish Reversal Above Blue Trendline

EUR/USD has popped up to $1.1773 on the 4 hour chart, and the price is surging with those strong green candles that have cleared that red MA resistance just above $1.174. The price is bouncing off that blue ascending trendline and the low at $1.169, which is forming a higher low.

That recent action is actually printing some pretty nice bullish engulfing stuff after holding onto that Fib 38.2% retracement. The RSI is now above 55 which is showing a definite shift in momentum. The big resistance zone is just overhead, at $1.179-$1.183 – which is that prior swing cluster.

Trade Idea: Consider buying EUR/USD at $1.1773 and targeting $1.183 with a stop at $1.174.