US Dollar Price Forecast: DXY Dips on Ceasefire – Can GBP/USD and EUR/USD Break Out?

Market Overview

US Dollar Index (DXY) has nudged slightly lower today, stuck in the low 98.30 region after President Trump threw a bone to the markets by extending the US-Iran ceasefire indefinitely. This brought a bit of a risk-on vibe to the table and knocked the dollar out of its usual safe-haven limelight for now. But the extension doesnt really fill you with confidence – it sounded like the Iran peace talks are back to square one because Iran wont budge on the naval blockade, and that keeps the Strait of Hormuz a major worry and oil prices on the upswing. All of which is keeping the Fed from getting too aggressive about cutting rates – which in turn gives the dollar a bit of a boost.

EUR is stuck in neutral, and one thing that could really shake it out of its funk is some positive geopolitics headlines. That said, the Eurozone numbers have been pretty underwhelming lately, and as long as the growth worries linger the euro is going to be on shaky ground. If things do start to calm down a bit in the Middle East, though, maybe we see a bit of a euro recovery as risk appetite comes back.

GBP is holding up pretty well, thanks to some decent UK labour and inflation numbers – and that’s keeping the BoE from feeling too much pressure to raise rates, even with energy costs keeping everyone on their toes. Still, all it takes is another sudden movement in the dollar or some fresh chaos in the Middle East to send the pound wobbly all over again.

DXY Holds $98.30: Bearish Structure Still Dominates

The US dollar is just below $98.30, stuck right alongside a trendline that’s been pushing it down and a major hurdle at $98.50. The price is still below both the 50-day moving average and the 200-day moving average , so that tells us the direction of the overall trend is bearish – even though we did see a bit of a bounce off $97.60.

We can see the trading action is all tight consolidation – little bodies on the candlesticks – and that’s telling us people are really uncertain about what to do now that they’re at the level where they think they should be selling. The momentum indicator – the RSI – is right on 50, so it’s not really giving us any clues.

Although it did come back up from being way too low , which is a positive sign. If we see price get knocked back below $98.50 – we could easily see DXY head back down to $97.60 . On the other hand – if price is able to break through that trendline we could see a pretty big move up towards $99.20 .

GBP/USD Holds $1.3530: Trendline Support in Play

GBP/USD is in the $1.3534 zone and is basically holding support above that trendline that’s been acting as a gentle upper hand on the price. The price is consolidating below that major resistance level $1.3580 , but the 50-day moving average is providing some short term support – and keeping the price from just falling off a cliff .

The candlesticks are showing a tight consolidation , and were getting higher highs which is sign of people gradually getting more confident about buying. The momentum has cooled right off – which is good news – because we never want to see it just keep going on forever .

And if price does break above $1.3580 – we could see $1.3650 . On the other hand – if we lose support at $1.3480 we could be looking at $1.3400 again.

EUR/USD Tests Channel Support Near 1.1750

EUR/USD is trading in the $1.1755 area and is basically holding inside an upward channel after a dip from the level at 1.1850 that’s been trying to act as resistance. The price is basically bouncing off of the lower boundary of this channel and the 50-day moving average, which is acting as support because its a moving average, but its doing a pretty good job. The trend is still showing higher lows – which means that the overall trend is still in our favour.

The price action is showing that buyers are stepping up – but not quite enough to get through the level at 1.1730 on this one. The momentum is starting to cool – which is good because we didnt want it to just keep going forever ! If price starts to come back up from this level we could see $1.1800 again – but if we see a break below the level at 1.1730 that could send price heading down to $1.1660