US Dollar Price Forecast: Dollar Strengthens as Rate-Cut Hopes Fade — Can GBP/USD Defend While EUR/USD Breaks?

Dollar Gains Ground on Persistent Inflation Fears Douse Rate Cut Hopes

The U.S. dollar rose on May 20, 2026 following April’s hotter-than-expected consumer price index report, which bolstered fears of sticky inflation and lowered expectations for imminent Fed rate cuts. The report highlighted continued pressure in shelter costs and the resurgence of energy prices in early 2026, though the U.S.-Iran ceasefire has helped bring oil shipments back to some semblance of normalization through the Strait of Hormuz.

Euro struggled against a strengthening dollar as well as conflicting commentary from the ECB about how the central bank is navigating its next moves. Meanwhile the sterling hovered in the middle of ranges on cautious comments from the Bank of England on its policy path, amid mixed signals on the U.K. economy.

President Trump’s talks with China’s President Xi Jinping in Beijing also factored into market pricing in the week, with a modest breakthrough on trade and technology issues adding a bit of comfort and helping risk sentiment recover a little bit from where it was on Monday.

The U.S.-Iran truce has tempered safe-haven buying of dollar on the back of geopolitical risk, but inflation report on Monday served as another reminder that any relief for the Fed rate cut path will have to wait on fresh data. Analysts expect the currency market to remain active given expectations of Fed commentary, along with another week of U.S. and U.K. economic data releases in the coming week.

DXY Surges Above $99.13 – Blue Ascending Channel Breakout Accelerates

The Dollar (DXY) has surged above $99.13 following a blue ascending channel breakout. The 1h chart shows the pair trading at $99.13 after solid green engulfing candles moved northward through a red 50-period moving average close to $98.90 as well as a white downtrend line. We’re on the upper leg of the blue trend channel which we established from mid-May lows. Higher highs and higher lows remain firmly in place. We broke through $99.00 resistance, a bullish continuation level.

The Relative Strength Index is above 55 and not oversold. We see a Fibonacci extension at $99.48 to $99.66. Volume is high in the $98.80 region and we see buying. Structure turns decisively bullish above $98.94.

Trade idea: Buy $99.13 targeting $99.48, stop $98.90.

GBP/USD Holds $1.3445 – Rising Channel Floor Defense

The British Pound (GBP/USD) is holding at $1.3445. The 2h chart shows it trading at $1.3445 after bullish rejection wicks defending a white uptrend line and 0.382 Fib close to $1.339. Red 50-period moving average close to $1.348. Higher lows are in place. We’re on the lower leg of a blue trend channel. We recently had mixed green/red candles indicating the bulls are on the defense.

The Relative Strength Index is near 52. We see strong volume in $1.339. Resistance is $1.348 to $1.353. Structure bullish above $1.339 while riding clean rising channel.

Trade idea: Buy $1.3445 targeting $1.348, stop $1.339.

EUR/USD Rejects $1.163 – Red MA Pressure Builds

The Euro (EUR/USD) has dropped from $1.163. The 2h chart shows it trading at $1.1628 after rejection candles moving downward through a red 50-period moving average close to $1.166 and white downtrend line. Bearish wicks are creating lower highs.

Selling at $1.172 high. We’re holding blue ascending support near $1.161. The Relative Strength Index is below 48. We see heavy selling in the $1.164 level. Structure weakens below $1.166 while testing rising channel floor.

Trade idea: Sell $1.1628 targeting $1.158, stop $1.166.