US Dollar Price Forecast: Drops on Ceasefire and Rate Cut Bets – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) edged lower to 98.25 in early Tuesday trading, pressured by easing geopolitical tensions and dovish signals from Federal Reserve officials. Investors are now turning attention to Fed Chair Jerome Powell’s upcoming testimony and June’s U.S. Consumer Confidence data for fresh cues.

Ceasefire Lowers Dollar’s Safe-Haven Appeal

The dollar’s decline followed President Trump’s announcement late Monday of a ceasefire agreement between Iran and Israel. Under the deal, both sides agreed to halt military actions, reducing the demand for the dollar as a safe-haven currency. With risk appetite returning, capital has rotated into higher-yielding assets.

Fed Commentary Signals Softer Policy Stance

Additional pressure came from Fed officials hinting at policy easing. Vice Chair Michelle Bowman cited labor market softness, while Governor Waller reiterated the possibility of a July rate cut. Markets now anticipate a 25-basis-point cut, weakening the dollar’s appeal to yield-focused investors.

Despite diplomatic progress, tensions remain fragile. Early Tuesday reports of missile activity from Iran reignited concern. If hostilities resume, demand for safe assets like the U.S. Dollar could rebound quickly.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) has broken sharply below its rising channel and now trades at $97.98, with momentum firmly to the downside. After failing to hold above $99.38, the index lost support at $98.91 and $98.27, slipping below both the 50-EMA ($98.64) and 200-EMA ($98.82) on the 2-hour chart.

This double EMA breach reinforces the bearish outlook. Recent candles display strong-bodied red closes, with no reversal signals, such as a hammer or doji, in sight. The next support lies at $97.60, followed by $97.37.

If the Fed confirms a dovish tilt, the DXY could remain under pressure. For now, technicals suggest the path of least resistance is lower.

GBP/USD Technical Analysis

The British pound surged to $1.3590, breaking above a key descending trendline and clearing resistance at $1.3547. The breakout was confirmed by strong bullish momentum, with price rallying above both the 50-EMA ($1.3482) and 200-EMA ($1.3492). This crossover reinforces the bullish case, as momentum shifts decisively upward.

Price action shows a clean rejection of the $1.3380 support earlier this week, followed by higher lows and a breakout candle with strong volume. The following resistance levels are $1.3621 and $1.3661. If bulls maintain control, $1.3703 could be tested.

On the downside, $1.3547 now serves as the first level of support. As long as the price stays above the EMAs and the former trendline, momentum favors the bulls.

EUR/USD Technical Forecast

The euro has rallied sharply, breaking above the key resistance at $1.1586 and reaching $1.1616 in early trading. The move follows a clean bounce off ascending trendline support and the 200-EMA ($1.1470), which had been tested earlier this week.

Price has since crossed the 50-EMA ($1.1526) and surged through multiple horizontal resistance levels without a significant pullback. Momentum is bullish. The recent breakout candle is supported by strong volume and long-bodied closes, suggesting buyers remain firmly in control.

The next upside levels to watch are $1.1632 and $1.1664, with $1.1702 as a potential medium-term target. If the price pulls back, $1.1586 may act as the first level of support. Until then, the bias remains bullish on EUR/USD.