US Dollar Price Forecast: Dollar Strength Persists as Traders Eye Michigan Sentiment – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) hovered around $99.26 on Friday as investors awaited key economic signals from the Federal Reserve and inflation indicators later this week.

European Data Sends Mixed Signals

Germany’s trade surplus widened to €17.2 billion, exceeding forecasts of €15.1 billion, reflecting stronger export resilience. However, Italy’s industrial production slumped 2.4%, sharply missing expectations of a 0.3% decline, reinforcing concerns about Europe’s manufacturing slowdown.

U.S. Focus Shifts to Fed Commentary and Inflation Outlook

Looking ahead, traders will watch Friday’s University of Michigan Consumer Sentiment Index, expected at 54.1 compared to 55.1 previously, along with inflation expectations at 4.7%.

Markets are also eyeing speeches from Fed officials Goolsbee and Muserlam for insights into monetary policy after Jerome Powell’s cautious remarks earlier in the week. However, analysts note that U.S. economic releases may face delays or revisions amid the ongoing government shutdown, keeping uncertainty elevated across markets.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near 99.26, consolidating after a strong rally from the 97.20 region. The index remains above its rising trendline, signaling steady upward momentum. The 50-EMA (98.48) and 200-EMA (98.03) now act as dynamic support, reinforcing the bullish structure.

The RSI at 65 suggests moderate strength but hints at possible short-term consolidation before another move higher. A retest of the 98.70–99.00 zone could attract buyers aiming for a push toward 99.57 and 100.25.

As long as DXY holds above 98.70, the broader outlook stays constructive, with traders watching for a potential breakout toward the psychological 100.80 resistance in the sessions ahead.

GBP/USD Technical Analysis

The GBP/USD pair is consolidating near $1.3310 after a steep selloff, reflecting weak momentum amid continued pressure from a stronger U.S. dollar. The pair remains below both the 50-EMA ($1.3413) and 200-EMA ($1.3464), signaling persistent downside bias. A descending trendline from September highs reinforces resistance near $1.3388, while support sits around $1.3277.

The RSI near 34 suggests mildly oversold conditions, hinting that a short-term rebound may occur before further downside attempts. A corrective bounce toward $1.3380–$1.3410 could face renewed selling interest if bulls fail to reclaim the moving averages.

Sustained weakness below $1.3270 would expose the next support at $1.3220, while a close above $1.3410 may signal early signs of stabilization.

EUR/USD Technical Forecast

The EUR/USD pair is trading near $1.1580, showing mild recovery after a steep drop from the $1.1760 region. The broader trend remains bearish as the pair trades below both the 50-EMA ($1.1666) and the 200-EMA ($1.1698), which continue to act as dynamic resistance. The recent break beneath the ascending trendline confirms downside pressure, with sellers maintaining control.

The RSI at 35 suggests the pair is nearing oversold conditions, hinting at a possible short-term rebound. Immediate resistance lies at $1.1630, while strong support rests near $1.1540.

A bounce from current levels could target the descending trendline near $1.1670, though sustained weakness below $1.1540 may open the path toward $1.1470 next.