US Dollar Price Forecast: Extends 9-Day Slide Ahead of Key PMI Data GBP/USD and EUR/USD

Market Overview

During Tuesday’s Asian session, the US Dollar Index (DXY) extended its decline for a ninth consecutive day, falling to 96.70, its lowest level in 28 months. The persistent weakness reflects growing uncertainty over the Federal Reserve’s policy direction, lingering inflationary pressures, and heightened political involvement in central bank decisions.

Political Interference and Inflation Add Pressure

Former President Donald Trump has intensified scrutiny of the Fed, publicly criticizing Chair Jerome Powell for being “too late” in adjusting interest rates. Reports suggest Trump has formally raised concerns about borrowing costs, adding to investor unease just weeks ahead of the July rate decision.

At the same time, inflation remains elevated. The core PCE Price Index rose last week, signaling persistent price pressures. Traders are now closely watching upcoming labor market data, including the ISM Manufacturing PMI, to assess the Fed’s next steps.

Fiscal Risks Add to Dollar Headwinds

Investor sentiment is further dampened by a proposed $3.3 trillion tax and spending bill backed by Trump. While marketed as a cost-saving measure, markets remain cautious about its potential impact on the national debt. Combined with inflation and political pressure, these fiscal concerns are deepening weakness in the US dollar.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading around 96.71, continuing to respect the confines of a descending channel that has defined price action since mid-June. The index remains below the 50-EMA (97.28) and 200-EMA (98.14), reinforcing the prevailing bearish trend.

Recent attempts to reclaim the 97.27 horizontal resistance were rejected, suggesting that sellers remain firmly in control. A close below 96.70 could expose the next support at 96.45, followed by 96.20. To shift sentiment, bulls would need to push the DXY above 97.27 and break through the channel resistance with conviction.

GBP/USD Technical Analysis

GBP/USD is trading around 1.3758, testing local resistance at 1.3769 following a steady climb supported by a rising trendline structure. The pair has maintained its bullish trajectory above the 50-EMA (1.3693) and 200-EMA (1.3586), with price action forming higher lows since mid-June.

A sustained move above 1.3769 could clear the way for a push toward 1.3812, followed by the swing high near 1.3859. On the downside, 1.3723 and the ascending trendline offer immediate support. A break below that level could trigger a short-term pullback toward 1.3673.

EUR/USD Technical Forecast

EUR/USD is trading around 1.1785, maintaining its position within a well-defined ascending channel that has guided price action since mid-June. The pair remains above both the 50-EMA (1.1709) and 200-EMA (1.1576), confirming bullish structure.

After briefly stalling near channel resistance at 1.1806, the price is showing signs of short-term consolidation. A breakout above 1.1806 could extend gains toward 1.1836 and 1.1869, while support lies at the mid-channel zone around 1.1747, followed by 1.1707.