US Dollar Price Forecast: DXY Holds 97.35 Trendline – Is a GBP/USD and EUR/USD Reversal Near?

Market Overview

The US dollar took a hit in early European trade on Friday. It had made some small gains overnight, but then basically went nowhere as investors got spooked by policy uncertainty and rising geopolitical tensions.

At 97.70, the US Dollar Index (DXY) was stuck, struggling to gain any real momentum.

Negative trade news then began to weigh heavily on market sentiment. Despite Donald Trump previously calling things off, he then signalled a 15% tariff on all imports, sending a clear message that business as usual isnt on the cards.

Things only got worse for the dollar when US Trade Rep Jamieson Greer came out and said that countries could face tariffs of 15% or even higher – the thought of that just poured more cold water on the dollar, making it harder for it to climb.

But at the same time, for some reason, the dollar is still getting some help from all this political posturing going on in the Middle East. There’s been all these warnings about the possibility of military action, which has all sorts of people getting nervous and wanting to move to something safer – that, of course, is the US dollar for now. Still, we aren’t getting any clear-cut signals from the market, and that is making it really hard to call what’s going to happen.

Market players are also keeping a close eye on developments with the US Producer Price Index in January. They are saying it will come in at 0.3% month-on-month, a slowdown from the 0.5% we had last time.

US Dollar Index Forecast: 97.35 Trendline Support Keeps 98.00 Break in Sight

The US Dollar Index (DXY) trades near 97.65 on the 2-hour chart, holding just above a rising trendline support around 97.35. Recent candles show repeated defenses of this level, with small-bodied consolidation reflecting equilibrium between buyers and sellers.

The 50-EMA near 97.70 acts as short-term resistance, while the 200-EMA around 97.55 provides underlying support. Horizontal resistance stands at 97.99, followed by 98.31 and 98.61. RSI hovers near 48, signaling neutral momentum without clear divergence. A sustained move above 98.00 would shift structure back toward higher highs.

Trade idea: Buy above 98.05 targeting 98.60, stop below 97.30.

GBP/USD Technical Analysis

GBP/USD is hovering around 1.3494 on the 2-hour chart, having just been rejected by the descending trendline that’s been drawn from 1.3700. The recent candles have been looking a bit mixed – a sharp drop down to 1.3450 followed by a bit of a recovery, which tells us there’s still some demand around the lower levels but nothing yet that’s changed our mind that the downtrend is over.

The 50 EMA near 1.3510 is acting as a bit of an immediate resistance zone, while the 200 EMA around 1.3560 is still looking pretty bearish. You can see the support levels coming in at 1.3450 and 1.3408 – and resistance at 1.3550 and 1.3583. The RSI is stuck around 48, which just about says it all in a market that’s still trending down.

Trade idea: Look to sell below 1.3480, aiming for 1.3410 with a stop above 1.3555.

EUR/USD Forecast: Symmetrical Triangle Tightens Near 1.1830 Resistance

EUR/USD is stuck at 1.1813 on the 2-hour chart, bouncing around the inside of a symmetrical triangle formed by the lower highs of 1.1927 and the higher lows of 1.1742. Price is just about to hit the 1.1825-1.1850 supply zone – which pretty much lines up with the 200 EMA at 1.1830.

The recent candles have been looking pretty flat and indecisive, with small bodies and big upper wicks, which suggests a lot of hesitation beneath that resistance line. The 50 EMA near 1.1810 is acting as a bit of a short term pivot. Your eye drops down to the 1.1773 support line, then the 1.1742 one, which are looking to act as some kind of a floor. The RSI is hovering around 55, which is exactly what you’d expect in a market where the volatility is turning down and the price is heading for the apex.

Trade idea: Look to sell below 1.1790, aiming for 1.1740 with a stop above 1.1855.