US Dollar Price Forecast: Gains as Trump’s Softer Trade Tone Calms Markets – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) traded near 99.00, reaching an intraday high of 99.13 on Monday as market sentiment improved following a softer tone from President Donald Trump on trade policy.

Trump said China’s economy “will be fine” and that the U.S. wants to “help China, not hurt it,” easing concerns about a renewed tariff escalation. The remarks helped stabilize the dollar after last week’s volatility and limited further downside pressure.

Mixed Consumer Sentiment Limits Dollar Gains

The University of Michigan’s Consumer Sentiment Index edged slightly lower to 55.0 in early October from 55.1 in September, but still beat expectations of 54.2. Inflation expectations moderated, with the one-year outlook slipping to 4.6%, while the five-year view remained at 3.7%.

The data suggests consumers are still cautious yet resilient, offering moderate support to the dollar despite mixed economic signals.

Fed Rate Cuts and Fiscal Uncertainty

Markets are pricing in a 97% chance of a 25-basis-point rate cut in October, with another reduction likely in December. These expectations may cap further upside for the dollar. Meanwhile, the ongoing U.S. government shutdown, now in its third week, continues to weigh on sentiment as Congress remains divided on a funding resolution.

Overall, the DXY remains stable as traders weigh trade progress optimism against domestic policy uncertainty and Fed easing expectations.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading around 99.12, showing signs of recovery after testing support near 98.74. The 50-day EMA at 98.60 and the 200-day EMA at 98.09 are acting as solid support zones, maintaining the broader uptrend.

If the index sustains above 98.70, it may retest 99.57, with further upside potential toward 100.25. Conversely, a break below 98.70 could open a decline toward 98.03.

The RSI near 58 suggests moderate bullish momentum without being overbought, indicating room for continuation. Traders may look for a clean breakout above 99.57 for confirmation of renewed strength.

GBP/USD Technical Analysis

The GBP/USD pair is trading near $1.3332, struggling below the descending trendline resistance around $1.3370. The 50-day EMA at $1.3396 and 200-day EMA at $1.3456 continue to cap upside movement, keeping the overall trend bearish. Immediate support lies at $1.3280, followed by $1.3206.

A break below these levels could open the door for a deeper decline. On the upside, a close above $1.3370 may signal short-term recovery toward $1.3450.

The RSI at 41 suggests weak momentum, indicating sellers remain in control for now. Overall, GBP/USD maintains a bearish bias while trading below the key EMAs and descending trendline.

EUR/USD Technical Forecast

The EUR/USD pair is trading near $1.1594, struggling to recover after a sharp decline. The 50-day EMA at $1.1653 and the 200-day EMA at $1.1693 continue to act as strong resistance, keeping the bias bearish. Immediate support lies at $1.1540, and a break below this could push the pair toward $1.1470.

However, a move above $1.1630 may trigger a short-term rebound toward $1.1710. The RSI at 42 shows limited buying momentum, indicating potential sideways movement before any major breakout. Overall, the structure suggests a bearish tone unless EUR/USD closes above the descending trendline near $1.1660.