US Dollar Price Forecast: Dollar Strengthens After Sticky Inflation — GBP/USD and EUR/USD Next Move?

Dollar Strengthens Amid Inflation Report That Underlines Fed Caution

The dollar picked up ground on May 20, 2026, following April inflation data that was stronger than projected and bolstered perceptions that price pressures are sticking and that rates cut are less likely in the short run. April’s Consumer Price Index reported headline and core figures above forecasts, indicating underlying costs tied to shelter and energy even as the truce between the United States and Iran permitted a partial restoration of oil flow through the Straits of Hormuz.

The euro was trading in a more cautious tone as the European Central Bank has sent mixed policy signals and the market awaits news regarding energy stability in Europe. The pound sterling also traded cautiously as the Bank of England continued to follow a policy that is data-driven in a mixed UK economic environment.

Meanwhile, President Trump’s meeting with Chinese President Xi Jinping in Beijing was the other major factor. There were some gains in risk appetite from the limited agreements regarding trade and technology, but they didn’t resolve concerns to any degree. Although the ceasefire has diminished safe-haven buying for the dollar, today’s inflation data reminded markets that monetary stimulus is not a certainty and will depend on data to come. Volatility may remain high for currencies over the next few days as market participants scrutinize Fed speak and more economic data releases.

DXY Climbs to $99.39 – Blue Ascending Channel Breakout Holds

DXY trades at $99.39 on a 2-hour chart and is currently trading in an ascending blue channel and breaking out of a channel since mid-May to the blue candles and the close at the lower price of the blue red-moving average, which is close to $98.90.

The blue candles have made higher high/lows with the last one being engulfed by a bullish candle at the blue level of $98.94. The bullish momentum in this zone is increasing in nature. The relative strength index has broken above the 55 mark in positive territory but without making an overbought condition.

The price action is making its way through the white moving average, which is a trendline descending line since the April high. The price action has rejected the white trendline in full.

The price is moving away from the recent high to form a new resistance with the Fibonacci extension line close to a new cluster, which is at $99.66 and $99.96. Volume profile has shown a strong floor close to $98.80. This zone is showing higher absorption and fair value gaps in buyers’ direction. The blue chart has a bullish structure as long as it trades above the $98.94 level while trading in a clean breakout blue channel.

Trade Idea: Buy $99.39 targeting $99.66, stop $98.94.

GBP/USD Holds $1.3393 – Rising Channel Floor Retest

GBP/USD trades at $1.3393 on a 4-hour chart and is currently trading in a white channel and retracing off a lower zone of that channel close to $1.3391. This zone was formed off a white trendline, which is ascending in nature and the 0.382 blue Fibonacci. The price was making higher high/lows inside of this white channel. The red moving average was at $1.345 as the dynamic resistance.

The last two candles at this zone were red and green, which were showing buyers’ absorption in this zone after some sellers’ distribution. RSI was trading around the 52 mark. This zone was showing neutral momentum at the moment. The volume profile has shown strong sellers at $1.3357 and strong absorption in buyers’ direction.

This zone will be the next higher price near $1.3446 and the red Fibonacci near $1.3485. This chart was bullish in structure as long as it trades above $1.3357. The white channel was formed off an ascending line and the current price action was retracing the lower zone of the white channel since early May.

Trade Idea: Buy $1.3393 targeting $1.3446, stop $1.3357.

EUR/USD Drops to $1.1594 – Bearish Fib Breakdown Confirmed

EUR/USD trades at $1.1594 on a 4-hour chart and is currently trading below a blue channel and making a breakdown below the ascending line of this blue channel, the lower red moving average, which is close to $1.166, and the blue Fibonacci.

This blue channel is a blue trendline, which is ascending in nature. The red candles are showing multiple bearish engulfing bodies that were printed off $1.172, which has made lower lows. This price action zone is showing distribution in sellers’ direction and making strong distribution with the help of red candles. The momentum at this zone has been shown as falling and confirmed with the help of the RSI in negative territory, which is trading below the 45 level.

The volume profile is showing $1.164 to $1.166 as failed fair value and showing strong sellers. The next lower prices will be the blue extension of the price action near $1.1554 and the red extension of the price action near $1.1539. $1.1554 will be 1.618 Fibonacci. The overhead price at $1.1628 became support in buyers’ direction, but the price was rejected in full from the $1.172 highs and it was flipped into resistance. The blue chart is bearish in structure as long as it trades below $1.160 and trades within an extended down blue channel.

Trade Idea: Sell $1.1594 targeting $1.1554, stop $1.1628.