US Dollar Price Forecast: DXY Steadies After CPI Cooldown – Will GBP/USD and EUR/USD Break Higher?

US Dollar Holds Steady at 96.97 Amid Thin Holiday Liquidity

The US Dollar Index (DXY) showed some surprising resistance on Monday, creeping up to 96.97 (+0.05%) despite all the talk lately of the Federal Reserve finally getting ready to pivot. And it’s not like trading was bustling along with lots of activity, no, it was actually pretty muted because of the US Presidents’ day holiday and that big celebration over in China.

The Inflation Chill Is Well and Truly Setting In: 2.4% CPI Fuels Speculation of Cuts

The real reason the dollar was under pressure is because of that softer than expected inflation report in January. Headline CPI came in at a 2.4% increase year-over-year which is a clear drop from the 2.7% we saw back in December.

• Monthly Momentum: Inflation Basically Ground Zero – Inflation slowed right down to 0.2% for the month, which was actually below what the experts were expecting – 0.3%.
• Fed To Hold Fire? This down-tick in inflation has really helped to solidify market bets for a “soft landing”. The CME FedWatch Tool now says there’s a whopping 90% chance that the Fed will leave things as they are in March, and folks are also starting to get excited about the possibility of a rate cut in June 2026

Market Sentiment Goes from ‘Total Panic to Cautious Optimism’

Okay, so the technical picture for the DXY is still looking a bit bearish in the long term, but for the last bit of the day there was a bit of a “safe haven” buying spree by nervous investors and that helped to push the dollar up a bit during the Asian and European trading sessions.

The dollar is probably just experiencing a correction of a correction right now, as traders wait to see what Wednesday’s FOMC minutes have to say about the Fed’s appetite for easing up on things.

US Dollar Index Forecast: DXY Coils Near 96.98 – Break Above 97.60 or Drop to 96.34?

The Dollar Index (DXY) is currently trading around 96.98 on the 4 hour chart, squeezed inside a tightening symmetrical triangle. Price continues to hover around the 0.382 fib level at 96.82, with a stubborn descending trendline from the January high capping any attempts to make a push upwards.

The candlesticks are starting to look pretty indecisive with those smaller body candles starting to overlap. It’s pretty clear that traders are getting a bit confused as price approaches the apex. The 50-day moving average is getting a bit lazy at about 97.20 and is acting as a bit of a short-term resistance, while the 200-day MA above 97.60 is a big fat line in the sand marking the ceiling. On the flip side, support is sitting at 96.34 (0.236 Fibo), followed by 96.01 and then 95.55.

A break above 97.60 and you can expect things to start moving pretty quickly upwards towards 97.98, but if price drops below 96.34 then it could be full steam ahead for 96.00 and 95.55.

Trade idea: Buy above 97.60 and you’re targeting 97.98, set your stop below 96.80.

GBP/USD Price Forecast: $1.3640 Stalls Below Trendline Resistance

GBP/USD is trading near $1.3640 on the 4-hour chart and its just bumping up against that descending trendline resistance and the 0.382 Fib at $1.3691. Price is consolidating right around the 0.5 Fib at $1.3635 and momentum is slowly but surely fading after price rejected near $1.3760.

The 200-day MA is sitting around $1.3580 and its still supporting the big picture structure, while immediate support is looking a bit more solid at $1.3579 and $1.3510. A break above $1.3690 and things could start getting interesting, with $1.3760 possibly on the cards, but if price drops below $1.3575 then you can expect a deeper pullback to follow.

Trade idea: Buy above $1.3695 and you’re targeting $1.3760, set your stop below $1.3570.

EUR/USD Price Forecast: $1.1860 Holds as Trendline Support Tightens

EUR/USD is trading near $1.1863 on the 4-hour chart and it’s holding on for dear life above that rising trendline support and a solid demand zone at $1.1835. Price rejected that big resistance level at $1.1927 and now we’re seeing those smaller candles starting to appear, it’s a clear sign that the bulls are starting to lose a bit of their steam.

The 200-day MA is lurking around $1.1765 and its still supporting the big picture uptrend. Right now, immediate support lies at $1.1835, then $1.1765 and $1.1672. A break above $1.1927 and you can expect things to start moving pretty quickly upwards towards $1.1997 and $1.2050, but if price drops below $1.1835 then it could be a deeper pullback on the cards.

Trade idea: Buy above $1.1930 and you’re targeting $1.1995, set your stop below $1.1830.