US Dollar Price Forecast: DXY Stalls at 100.50 – Are GBP/USD and EUR/USD Set for a Breakout?

The Dollar Firm as Oil-Driven Inflation Redraws Rate Expectations

The US Dollar Index (DXY) is clinging to the 100-mark for now, buoyed by safe haven demand and a pretty dramatic jump in oil prices courtesy of the Middle East mess. And with energy costs spiking as a result, inflation worries are getting worse – which is why market folks are now rethinking their Federal Reserve rate cut hopes and all that’s doing is keeping the dollar afloat thanks to higher interest rates.

EUR/USD is hovering around 1.15, lagging because the European Central Bank is not looking to cut interest rates anytime soon – which puts the eurozone at a disadvantage whenever energy costs start to rise. Meanwhile, GBP/USD is trading near 1.32, but even the prospect of higher inflation in the UK isn’t enough to give it a boost, because in the end its all being held back by the dollar’s general strength.

Overall, it’s global politics and oil-driven inflation that’s making the headlines when it comes to FX fundamentals at the moment

DXY Outlook: Dollar Stalls Below 100.50 as Momentum Fades

The US Dollar Index (DXY) is hanging around 99.90-100.00 – still clinging to an ascending trendline but struggling to break free of the 100.50 ceiling. As of now the price is still holding up thanks to support from the 200 day moving average down at 99.30, but the 50 day moving average is pretty much flatlining – a sign of slowing upward momentum.

You can see the indecision in the recent price action – the RSI is now hovering just below the mid 40s, which suggests a weakening of the buying pressure. If we do see a sustained break above 100.50 we could see the price go all the way up to 101.10 ; but if instead we get a move below 99.50, then we could be looking at a more serious pullback to 99.30.

Trade idea: Consider selling if price drops below 99.50 and see if we can go all the way down to 99.00.

GBP/USD Outlook: Bounce Faces Strong Trendline Resistance

GBP/USD is sitting at $1.3240-$1.3250, trying to make a comeback but still stuck below a downward trending line and the 200 day moving average at $1.3350. Price has actually bounced back a bit from the $1.3160 level and is currently forming short-term higher lows – which is something to keep an eye on. But the overall picture still looks pretty bearish.

The 50 day moving average is pretty flat – not a lot of telling you there. But what is pretty clear is that there are sellers lurking around the $1.3300 area – and the RSI is growing stronger towards the middle ground, which is helpful for the short term but probably not much more than that.

If we do see the price break above $1.3300 , then we could see the price head up to around $1.3350-$1.3470; but if on the other hand the price can’t hold above $1.3200 then a drop back down to $1.3160 is looking likely.

Trade idea: Consider buying if price breaks above $1.3300 and see if we can hit $1.3400

EUR/USD Outlook: Recovery Faces Trendline Resistance

EUR/USD is hovering around 1.1550-1.1570, trying to make a comeback but still stuck below a downward trending line and the 200 day moving average at 1.1600-1.1620. The price is still putting in higher lows which is a good sign – it suggests that there’s some underlying support there. And the 50 day moving average is still acting like near-term support too.

RSI is slowly creeping up but is still pretty neutral – which just tells us that there’s no real momentum either way. If we do see a break above 1.1620 we could see the price make a run for 1.1700; but if the price fails to hold around 1.1510 then we could see a drop all the way down to 1.1450.

Trade idea: Consider buying if price breaks above 1.1620 and see if we can hit 1.1700.