US Dollar Price Forecast: DXY Dips on Tariff Risk – Are GBP/USD & EUR/USD Set to Fly?

Market Overview

During the early European trading session, the US Dollar Index extended its losses are likely to linger near the 97.50 mark but the downward trend may be due to growing unease over US economic policy direction . The losses however, could be cushioned – because some now think the Fed is unlikely to cut interest rates any time soon

Dollar Pressured by Tariff Moves and Policy Uncertainty

US President Donald Trump recently got up in front of his crowd and gave a big pitch on his tariffs. He reckons theyre a winner for the US economy. Also took a shot at the Supremes for throwing out some of his earlier tariffs. Now that they’ve blocked off some of those country specific ones, he just upped the Section 122 tariffs from 10% to 10% instead of the 15% he was threatening. The dollar is feeling the heat from all the tariff and people just don’t know what’s going to happen with them.

To add to that , the IMF head (Kristalina Georgieva) said that all these tariffs have ended up pushing up US inflation on the goods side. She also mentioned that a tiny cut in interest rates – possibly as low as 3.25% to 3.50% might just keep jobs steady. But shes also saying the government really needs to take some serious action to get the country’s debt back under control – once and for all. So her comments are weighing on the US dollar

Fed Officials Signal Interest Rates Likely to Remain Steady

The dollar is headed down but probably not going to drop much because people dont think the Fed will cut rates anytime soon. Chicago Fed President Austan Goolsbee said the inflation picture didnt really improve last year and is still a bit above target.

Boston Fed President Susan Collins is saying pretty much the same thing , she says keeping rates steady makes sense because the job market is strong & inflation is still pretty high.

US Dollar Index Forecast: The Rising Trendline at 97.40 Keeps 98.00 Within Reach

The US Dollar Index (DXY) is hovering around 97.63 on the 2-hour chart, but a pretty good support line is holding at 97.40. You can see that the price of recent candles is experiencing a series of small bodies with very low wicks. That’s a clear sign that people are getting in on the dips. The fact it’s holding above the 200 day EMA at 97.35 is also a positive sign. On the other hand, the short-term picture is a bit more mixed, with the 50 day EMA at 97.60 acting as a bit of a balancing point right now.

We also have some level resistance to watch out for – 98.07, 98.41 and 98.83. Things have been shaping up into a bit of a shallow ascending channel since they dipped to 96.60. The momentum on our RSI gauge is pretty much neutral, sitting at 48, and without any real divergence.

Trade idea: Buy the dollar if it breaks above 98.10, aiming for 98.80, and be prepared to get out if it drops below 97.30.

GBP/USD Forecast: Symmetrical Triangle Near 1.3530 Signals Breakout Setup

GBP/USD is trading at about 1.3536 on the 2-hour chart right now, and we’re seeing it stuck between those key points 1.3575 and 1.3435 – basically, a symmetrical triangle is forming here.

The short term 50 EMA is sitting just above at 1.3530 acting as a kind of temporary balance, and the 200 EMA at 1.3580 is just above that and actively putting a lid on any big moves up. We also have some key levels in mind, like 1.3460 and 1.3435 being strong support, and 1.3575 is a resistance level waiting to be tested.

With the RSI at 58 we can say the momentum is a little bit on the bulls side, but we need a little more juice to get that next big move

Trade idea: A good buy play here might be to look for the price to go over 1.3580, then taking it to 1.3665, stop-loss below 1.3520.

EUR/USD Forecast: Descending Trendline Caps 1.1850 as 1.1770 Support Holds

EUR/USD is currently sitting at 1.1805 on the 2 hour chart, nudging up against a downtrend line that has been shaping the highs since it peaked at 1.1927. As it moves into this zone it’s also putting pressure on a supply area around 1.1825-1.1850 which just so happens to line up with the 200-ema at 1.1830.

Recent price action shows some pretty clear hesitation from buyers. Those upper wicks are indicating that traders are having cold feet. The 50-EMA is hovering at around 1.1800 which should at least provide some temporary support. If we look down at the chart we can see a nice level of support at 1.1773 and then another one at 1.1742. The RSI is currently stuck at 55 – its not looking like there’s any real steam behind this bounce – a rejection here and the downtrend is likely to be back on.

Trade Idea: Sell when price breaks below 1.1790 with a target of 1.1740 and stop loss above 1.1855.