US Dollar Price Forecast: DXY Hits $98.30 on War Risk – Are GBP/USD and EUR/USD Safe?

Market Overview

The US Dollar is on the move, and it’s gained a bit of momentum, staying pretty firmly bid around the 98.20 mark. But – and here’s the thing – it’s not necessarily the strong fundamentals of the Dollar that are driving its upward trend – it’s actually the escalating tensions in the Middle East and the renewed scramble for safe-haven assets from traders that’s sending it higher.

With the ISM Manufacturing Purchasing Managers’ Index due out later in the day, market players are on high alert waiting for the numbers.

Fed Rate Cut Talk Buys Time for the US Dollar

Now as we’ve already said, US Federal Reserve Governor Mi Lan floated the idea that the Fed should probably lower interest rates soon. The reason being that inflation’s still relatively low, so there’s no need to keep rates super high.

Her comments got a lot of mileage because – and this is no surprise – people are thinking the Fed might be bringing forward its rate cut plans. Normally that would spell trouble for the Dollar, but right now – with the tensions in the Middle East at a fever pitch – investors are taking a very cautious approach and looking for somewhere safe to park their cash.

Middle East Turmoil Keeps the US Dollar Healthy

On top of all that, the US Dollar got a pretty big boost from the heightened tensions in the Middle East too. Just for some background, Israel was pretty aggressive with its airstrikes on Beirut after Hezbollah fired missiles across the border on Monday. And then there were the US and Israeli airstrikes on Iran over the weekend – which, by the way, reportedly took out Iran’s Supreme Leader Ayatollah Ali Khamenei.

The Israeli military told a few Lebanese towns to get out – and US President Donald Trump said that hundreds of targets were hit, including military bases, air defenses, ships, ports – the whole shebang. He made it pretty clear that the attacks would just keep going until all the US objectives are met.

That’s got investors on high alert and looking for solid places to stash their cash, which in turn is keeping the US Dollar afloat even if the Fed is thinking of cutting interest rates.

What’s Next for the US Dollar

Looking ahead, traders will be watching the ISM Manufacturing PMI report with bated breath, because it could have a pretty big impact on the US Dollar in the short term. Any new developments in the Middle East or any fresh commentary from the Federal Reserve could send the Dollar either way.

For now, at least, the US Dollar’s staying strong because investors are taking a very cautious approach and looking for that safe and stable place for their cash during these uncertain times.

U.S. Dollar Index Technical Outlook: $98.30 Break Signals Upside Shift

The U.S. Dollar Index is hovering around $98.22 on the 2-hour chart after finally breaking free from the $98.02 resistance level. Price keeps forming higher lows along an upward sloping trendline – a clear sign its got some short-term momentum going for it.

That latest bullish candle is pretty convincing – price stays high above the 50-period EMA, while the 100-period EMA is starting to flatten out below it. That’s a pretty clear sign that things are starting to speed up in the dollar’s favour. Immediate next stop for price is likely to be $98.31, followed by $98.60 and $98.86 – and if it can clear $98.86 then we could see a nice run all the way to $99.00.

The RSI is sitting pretty steady at 60, which is great news for anyone looking to buy the dollar – it’s got a good bit of buying pressure behind it, without things getting out of control. Support is lurking at $97.76 and $97.56 – so if price does start to fall, these are the places to watch.

Trade idea: Buy above $98.30, aiming for $98.86 – stop-loss is below $97.75.

GBP/USD Technical Outlook: Breakdown Below $1.3415 Signals Bearish Pressure

GBP/USD is trading around $1.3377 on the 2-hour chart after finally breaking through the $1.3415 support level – and that says one thing: the sellers are in charge for now. Price remains stuck under a downward sloping trendline and below both the 50-period and 100-period moving averages, which are both pointing downwards.

That bearish candle that broke through $1.3415 was a beauty – and its given the sellers a confidence boost. To see this slide continue, its got to break through $1.3361, and then $1.3312. On the flip side, resistance is a lot tougher – at $1.3457, and $1.3512.

The RSI is hovering around 40, which isn’t exactly great news for anyone looking to sell – but its not extreme yet either, so there’s still room for things to get worse.

Trade idea: Sell below $1.3410, aiming for $1.3312 – stop-loss is above $1.3460.

EUR/USD Technical Outlook: Triangle Breakdown Exposes $1.1700 Zone

EUR/USD is trading around $1.1734 on the 2-hour chart after finally breaking through the $1.1760 trendline – and that’s bad news for the Euro. This breakdown of the bearish triangle is a big deal – and price is now heading straight for $1.1720, with $1.1680 looking like a possible next stop.

Price is now below both the 50-period and 100-period moving averages – and they’re both starting to point downwards.

The downward sloping trendline from the $1.1920 region is still intact – so any rebound is going to be short-lived. The RSI has slipped all the way to 35 – which isn’t extreme yet, but its getting a bit dodgy.

Trade idea: Sell below $1.1750, aiming for $1.1680 – stop-loss is above $1.1795.