US Dollar Price Forecast: Dollar Firms Amid Trump-Xi Talks & Truce — Can GBP/USD and EUR/USD Recover?

Dollar Firms as Sticky Inflation Data Dampens Rate-Cut Expectations

On May 22, 2026, the U.S. dollar strengthened modestly after April’s CPI print, where both headline and core prints came in above expectations. Investors had already taken out some of the anticipated rate cuts under Chair Warsh in advance of the reading, as sticky inflation, especially shelter, had remained on the market’s radar. This is particularly true given the recent conditional ceasefire between the US and Iran which had led to a decrease in demand for the dollar as a safe-haven, although today’s inflation print is reminder the path to rate cuts remains uncertain.

On the front of the ECB and BOE divergence, the euro was under pressure as mixed signals from the European Central Bank narrowed policy divergence expectations, while the pound traded in a more cautious mode as Bank of England policymakers have reiterated that they want to see more data as a result of mixed economic signals in the UK and global uncertainty in general.

Analysts note that the dollar will continue to trade according to where the labour market cools and where inflation is sticky, with more data on the horizon that may impact expectations of rate cuts this year, which could provide further tailwinds for the greenback.

DXY Rallies to $99.28 as Ascending Blue Channel Gains Momentum

DXY is currently trading at $99.28 on the 2h timeframe. The price respected the blue ascending channel from May mid lows with green continuation candles, subsequently crossing through the red 50 MA at $98.90. The price continues to print higher highs and higher lows and has bullish engulfing bodies forming near $99.00 support, supporting price upside. RSI is above 55, suggesting good momentum, but still not overbought. The price is rejecting the white descending trendline.

Next targets based on Fib extensions are $99.41, 99.51, the next resistance level. Volume profile suggests that $98.97 is good support with buyers being dominant. The price structure is bullish as price trades above $98.97 and is riding cleanly in a breakout channel on the way to the $99.51, 99.73 area.

Trade idea: Buy $99.28, target $99.51, stop $98.97.

GBP/USD is Steady at $1.3423 as Ascending Trendline at Bottom of Channel

The GBP/USD is trading at $1.3423 on the 2h timeframe. The price tested the white ascending trendline, 0.382 Fib at $1.339, and the red MA at $1.345 with rejection candlesticks. The price maintains its support near $1.339 and the red MA acts as dynamic resistance in the rising channel, with green wicks and higher lows.

The red MA near $1.345 acts as dynamic resistance in this timeframe. Candles at distribution mixed with buyer absorption in the channel is suggesting a good support in this timeframe. RSI is around 52 and the price has neutral momentum. The volume profile shows that $1.339 is good support with buyers being dominant. The next targets for the resistance levels are the $1.3446, 1.3485 area. The price structure is bullish and riding a channel and is above $1.339 in the short-term.

Trade idea: Buy $1.3423, target $1.348, stop $1.339.

EUR/USD Drops to $1.1604 as Descending Trendline Rejection on White

The EUR/USD is trading at $1.1604 on the 2h timeframe. The price rejected the white descending trendline, red MA near $1.166 and red MA with rejection candlesticks. The price prints lower highs and lower lows and bearish wicks at distribution as the price supports on the blue ascending channel at the $1.158 support. The RSI is below 48 confirming price lack of momentum.

The Volume profile shows $1.162 as good resistance with sellers being dominant. The next support lies in the $1.158, 1.156 Fib area. The price structure is weak as price trades below $1.166 and is riding within a channel on the downside in the overall range.

Trade idea: Sell $1.1604, target $1.156, stop $1.164.