US Dollar Price Forecast: CPI Data Looms as DXY Holds $98 – GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) eased to 98.10 during Tuesday’s Asian session, breaking a four-day winning streak as traders await the June Consumer Price Index (CPI). The inflation data is expected to guide expectations for the Federal Reserve’s next policy move.

Tariff Threats and Geopolitical Risks Weigh on Dollar Sentiment

The dollar’s retreat follows a sharp rise in geopolitical risk. Former President Donald Trump threatened new tariffs, warning of “very severe” measures against Russia if no peace deal is reached within 50 days. He also proposed secondary sanctions on countries continuing Russian oil imports.

Further escalating trade tensions, Trump announced a 30% tariff on EU and Mexican goods starting August 1, alongside a broader increase in general tariffs to 15–20%. Additionally, a 17% duty was imposed on fresh tomatoes from Mexico. These developments have sparked market caution and weighed on dollar demand.

Trump also confirmed a major arms package to Ukraine, including Patriot missile systems, amplifying geopolitical uncertainty.

Fed’s Hawkish Stance Provides Support

Despite global tensions, the dollar remains underpinned by the Federal Reserve’s firm policy stance. Cleveland Fed President Beth Hammack reaffirmed the need for restrictive policy, citing persistent inflation and a resilient US economy.

She indicated little urgency to cut rates, especially with fiscal risks on the rise.

Markets now await CPI data for clues on the Fed’s next move. Until then, rate expectations and tariff uncertainty are likely to cap further dollar losses.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is consolidating just below the 98.00 mark after briefly peaking near 98.14, while holding above key support at 97.88. The index remains within a well-defined ascending channel, with both the 50-period EMA at 97.79 and the 200-period EMA at 97.70 acting as dynamic support zones. As long as price action remains above these moving averages, the bullish trend remains intact.

Upside targets include 98.14, followed by stronger resistance at 98.28 and the recent high at 98.43. A sustained breakout above these levels could trigger a fresh wave of buying. On the downside, a break below 97.88 may expose support at 97.66 and 97.50, where previous demand zones align with the lower boundary of the channel.

GBP/USD Technical Analysis

The GBP/USD pair is attempting a rebound after finding support near the 1.3417 level, which aligns with the 0% Fibonacci retracement and a key demand zone. Price action shows a short-term bullish move, challenging the 0.236 Fibonacci resistance at 1.3456. If bulls push beyond this level, further recovery could target the 0.382 level at 1.3481, followed by the 0.5 retracement at 1.3501.

However, the pair remains inside a well-defined descending channel, and both the 50-period EMA at 1.3510 and the 200-period EMA at 1.3574 sit well above current price, reinforcing a broader bearish bias.

Until the price reclaims the 1.3500 zone and breaks above the trendline resistance, rallies may face selling pressure. A close below 1.3417 would invalidate the current bounce and expose 1.3395 and 1.3369 as the next support zones.

EUR/USD Technical Forecast

EUR/USD is currently trading around 1.1688 on the 2-hour chart, attempting to break out of a well-defined downward-sloping channel. The pair is facing immediate resistance at the upper boundary of the channel and the 50-period exponential moving average (EMA), which sits near 1.1692.

A clear breakout above this level could shift the short-term bias from bearish to neutral, opening the door for a move toward the next resistance levels at 1.1707 and 1.1749. However, as long as price remains below these levels, the broader downtrend remains intact.

On the downside, the 200-period EMA near 1.1676 is currently offering dynamic support, with horizontal support levels seen at 1.1659 and 1.1625. A break below these zones could accelerate bearish momentum toward 1.1590.