US Dollar Price Forecast: DXY Slips After Trump Speech & Fed Caution – Are GBP/USD and EUR/USD Set for a Breakout?

Market Overview

On Wednesday, the US Dollar Index, or DXY, measures the strength of the US Dollar against a basket of six major currencies. It’s currently trading around 97.80 and is showing some weakness after US President Donald Trump’s annual State of the Union speech.

Markets are now holding their breath waiting for speeches later today from Federal Reserve officials Jeff Schmid and Alberto Musalem to see if they can give the dollar a bit of a boost.

Trump’s Speech and Tariffs Weigh on the Dollar

In his speech, Trump praised his economic record, saying inflation is lower and that his administration is tackling illegal immigration and fentanyl at the border. Besides this, he threatened higher tariffs on countries he thinks are “playing games” with trade deals.

He recently set a 10% global tariff and even warned it could go up to 15%. As a result, fears of a trade war are putting pressure on the dollar.

Fed Signals Patience on Interest Rates

Minutes from the January Fed meeting revealed that many officials think it’s too early to cut interest rates. They want to see clear evidence that inflation is steadily coming down before making any changes.

Moreover, comments from key Fed policymakers confirm that the central bank is in no rush to ease policy, especially while inflation remains stubborn.

Despite this steady Fed approach, the markets are cautious. As a result, US dollar remain lower.

Investors Eye January PPI as Inflation Data Could Boost the Dollar

Investors are going to be keeping a close eye on the US January Producer Price Index (PPI), which comes out on Friday. Economists predict it’ll come in a bit softer than the last time round, but if those numbers blow past expectations – and come in much higher than everyone was expecting – then it could be a real boost for the dollar.

US Dollar Index (DXY) Forecast: Can 97.64 Support Fuel Break Above 98.07?

The US Dollar Index is currently trading at around 97.83 on the 2-hour chart, and it’s holding on to the 97.64 support level like its life depends on it – all whilst running along an upward trendline which originated at the 96.60 low. Price has just recovered from a bounce off the 98.07 ceiling, with candles that are getting smaller and smaller suggesting it might just be willing to call it a day for a while and have a little rest.

The 50-period moving average is currently at 97.70 and is doing a great job of acting as dynamic support; meanwhile, the 200 MA is hovering around 97.40 and reinforcing the near-enough recovery shape the dollar is in.

The RSI is currently sitting at about 55, which tells you it’s not overbought or anything – so it’s nice and steady. A sustained move above 98.07 and we could be off on an adventure to 98.41 – who knows – the possibilities are endless

Trade Idea: If you see it break above 98.10, grab a few dollars and target 98.40. Then set a stop loss below 97.55 and hope for the best

GBP/USD Forecast: Is 1.3535 Triangle Resistance Set to Break?

GBP/USD is currently trading at about 1.3517 on the 2-hour chart and it is stuck fast in a symmetrical triangle pattern. With price stuck between support from 1.3435 and resistance near 1.3535 The overall pattern is one of consolidation after the fall from 1.3579 and the higher lows suggest that someone might just be buying it quietly.

The 50-period moving average is around 1.3500 and doing a very good job of keeping things steady while the 200 MA is lurking around 1.3560 ready to put the brakes on if anyone gets any funny ideas

Trade Idea: If you see it break above 1.3540 then grab a few pounds and target 1.3580. Set a stop loss below 1.3480.

EUR/USD Forecast: Will 1.1820 Resistance Cap the Rebound?

EUR/USD is currently trading at about 1.1790 on the 2-hour chart and its making a bit of an attempt to bounce back against that descending trendline that started at 1.2040 peak. But for its pains its just getting capped back down by the 1.1820 resistance zone – which just so happens to be very close to the 50-period moving average which is currently lurking around the 1.1800 mark.

The 200 MA is sitting around 1.1825 and doing a grand job of reinforcing the resistance cluster  The RSI is hovering about 50 which is roughly neutral and doesnt indicate any great conviction at all either way. If it does finally break above 1.1820 then we might just see a little further to 1.1890 – but if it fails you can expect it to test 1.1740 instead

Trade Idea: If you see it sell off below 1.1785 then grab a few euros and target 1.1745. Then set a stop loss above 1.1825.