US Dollar Price Forecast: DXY Stalls Near 98.80 as Tariff Pressure Mounts – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) stabilized around 98.80 in early trading after recovering from earlier losses. However, sentiment remains fragile as renewed concerns over U.S. tariffs and growth risks weigh on the currency.

Disappointing Services and Jobs Data Pressure the Dollar

Recent U.S. economic releases point to growing weakness. The ISM Services PMI dropped to 49.9 in May, signaling contraction in the services sector for the first time since June 2024—well below the expected 52.0.

Meanwhile, ADP private payrolls increased by just 37,000, missing forecasts of 115,000 and marking the weakest job growth since March 2023. These figures have heightened concerns over labor market softness and broader economic resilience.

Trump Calls for Rate Cuts as Fed Maintains Caution

President Donald Trump has ramped up public pressure on the Federal Reserve, urging Chair Jerome Powell to cut rates immediately. Trump criticized Powell on Truth Social, highlighting Europe’s multiple rate cuts and calling Powell “unbelievable” for lagging behind.

In contrast, Minneapolis Fed President Neel Kashkari acknowledged some labor market softening but emphasized that more data is needed before altering policy. He advocated a measured approach, signaling no urgency for a rate move.

Outlook for the Dollar Remains Uncertain

With tariff risks, weak economic data, and diverging Fed signals, the outlook for the U.S. dollar remains clouded. While DXY holds around 98.80, markets are increasingly cautious ahead of Friday’s Nonfarm Payrolls report, which may determine whether the dollar breaks lower or finds near-term support.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) remains under bearish pressure, trading near 98.85 after failing to reclaim the resistance at 98.95, which is just below a descending trendline drawn from the May 30 high. Price action is capped by both the 50-period EMA at 99.06 and the 200-period EMA at 99.56, both of which continue to slope downward—a bearish alignment that reinforces broader downside pressure.

DXY has formed a series of lower highs since late May and remains locked below the falling trendline resistance. Support is currently seen around 98.57, with further downside risk toward 98.27 and 97.93 if bearish momentum accelerates.

On the upside, a break and close above 98.95, followed by a decisive move through 99.34, would be needed to invalidate the current downtrend and open the path toward 99.66 and 99.97.

GBP/USD Technical Analysis

The British pound is edging higher against the dollar, currently trading at $1.3566, after finding support near the rising trendline and $1.3541 pivot zone. Price remains firmly above the 50-period EMA at $1.3526, with the 200-period EMA at $1.3452 reinforcing the broader bullish tone.

The pair has now tested the $1.3578 resistance area multiple times since early June. A confirmed breakout above this ceiling could open the door toward $1.3608, and potentially $1.3640 in extension. Conversely, if the pound closes back below $1.3541, a retest of $1.3503 may follow.

EUR/USD Technical Forecast

EUR/USD is holding firm at $1.1415 after rebounding off the ascending trendline support and the 50-period EMA at $1.1392 on the 2-hour chart. This bounce reaffirms the bullish structure that has been building since late May, with the 50 EMA above the 200 EMA ($1.1335), signaling that upward momentum remains intact.

Despite recent consolidation below $1.1445, buyers continue to defend the trendline and show commitment above $1.1389, suggesting accumulation rather than distribution. A sustained move above $1.1445 could pave the way for a push toward $1.1480, followed by the key resistance level at $1.1513.

Conversely, a close below $1.1389 would threaten the bullish trend, exposing $1.1323 as the next downside target.