US Dollar Price Forecast: DXY Rises as Middle East Tensions Flare – GBP/USD and EUR/USD to Drop?

Market Overview

The US Dollar Index is trading around about 98.55 to 98.74 as of March 3rd, 2026, and the major data providers are tipping that number. The index then went up about 0.1–0.4% in the latest session after shooting up close to 1% on March 2nd and touching a five-week high around 98.75.

Over the past month, the dollar has put in a respectable rise of about 1-1.2%. But, we should still note it is still down roughly 6.7-8% since the start of 2025.

Market Drivers

The reason the dollar has been doing pretty well lately is because of the heightened tensions involving the US, Israel, and Iran. As things have escalated in the region, oil prices have shot up, that’s increased inflation worries and investors are getting spooked and moving into safer assets – which isn’t great for global markets.

• The DXY had its biggest daily gain in weeks on March 2nd when energy prices went up and investors started dumping stocks and pouring their cash into stable assets.
• On March 3rd, the dollar wasn’t doing much different, only about 98.6 – but all the same, investors are speculating that high oil prices could put the kibosh on the Federal Reserve cutting interest rates.
• The dollar strengthened against the main currencies, EUR/USD slipped below 1.17 for example, and a lot of the economies that import a lot of energy got slammed even harder.
• Equity markets softened up and Treasury yields went up because of all the inflation worries which in turn made people more likely to invest in the dollar.

Fundamental Outlook

Why has the dollar been down for so much of 2025 you ask? Well it was because the Federal Reserve decided to ease up a bit, the global economy was looking better and there was just a lot of uncertainty surrounding policy changes. Fundamentals today are a mixed bag.

• The Federal Reserve is keeping interest rates pretty steady at 3.5-3.75% right now – and investors are thinking they might not cut them much at all in 2026.
• Inflation is expected to be around 2.7-3% – but there are a few risks to watch out for there, like what happens if energy prices keep going up, or if the government passes some new fiscal policies.
• US growth is still ok, but realistically our debt levels are a pretty big constraint for policy makers.

Geopolitical risk and inflation are the main drivers right now that are supporting the dollar. But if things start to settle down and global conditions stabilise, we might see a bit of a reversal in the long term.

U.S. Dollar Index Forecast: Break Above 98.44 Puts 99.14 in Sight

The US Dollar Index (DXY) is currently trading at 98.73 on the 4-hour chart, and its breakout above 98.44 has got it sticking out above the short-term ascending trendline, and it’s still firmly above its 50-EMA and 200-EMA – that’s got to be a good sign for the near-term momentum.

The next obstacle on the horizon is 98.83, and then there’s 99.14 and 99.47 sitting just ahead – that’s the kind of upper range we’re talking about if we get a sustained move above 99.14. On the flipside, 98.44 is now acting as the immediate support level, and 98.06 is on our radar as secondary protection.

Given the RSI is pushing up against 70, that’s just saying that the upside pressure is still very strong, but we’re getting close to overbought territory, so we need to keep an eye on that.

Trade Idea: Buy above 98.60 and aim for 99.14, place your stop below 98.00.

GBP/USD Price Forecast: Slide Below 1.3430 Opens Door to 1.3310

GBP/USD is trading at 1.3356 on the 4-hour chart, and its decline is extending after breaking through the 1.3430 support level and the descending trendline from 1.3850. And the pair is still sitting under both the 50-EMA and 200-EMA, which is reinforcing the bearish short-term structure.

And then there’s been those lower highs around 1.3575 and 1.3660 – those are just confirming the downside pressure we’re seeing on GBP/USD. Support is looking pretty solid at 1.3313, followed by 1.3250 – but if we do get a decisive break below 1.3313, 1.3182 is definitely a possibility.

On the other hand, 1.3508 is now key resistance – we’ll be keeping an eye on that, and then there’s 1.3575 a bit higher up. RSI is hovering just above 35, which is saying that selling momentum is strong, but we’re not getting to the point of being extremely oversold.

Trade Idea: Sell below 1.3380 and aim for 1.3310, place your stop above 1.3500.

EUR/USD Price Forecast: Break Below 1.1713 Shifts Focus to 1.1620

EUR/USD is hovering at 1.1664 on the 4-hour chart, and its losses are extending after breaking through the 1.1713 support level and slipping underneath the ascending trendline. Now the pair is sitting under both the 50-EMA and 200-EMA – that’s reinforcing the short-term bearish momentum.

What’s caught our eye is the way the rejection from that 1.1833-1.1882 resistance zone formed a lower high, which is just confirming the downside pressure we’re seeing. And that’s got us looking at support at 1.1619, followed by 1.1550. A sustained move below 1.1619 might actually get us on to 1.1493.

And on the flipside, 1.1765 is now a key level of resistance – we’re going to watch that closely, and RSI is drifting down to 35, which is just saying that selling pressure is increasing, but we’re not in oversold territory yet.

Trade Idea: Sell below 1.1680 and aim for 1.1620, place your stop above 1.1765.