US Dollar Price Forecast: Inflation Miss Fuels Dollar Pullback, GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) traded near 98.90 on Monday, stabilizing after mixed inflation data on Friday. The Core CPI rose 0.2%, below forecasts of 0.3%, while headline CPI climbed 0.3%, also slightly weaker than expected.

However, annual inflation stood at 3.0%, matching market projections and reinforcing expectations of a Federal Reserve rate cut at the upcoming policy meeting.

The softer inflation data weighed on short-term dollar sentiment, as traders adjusted positions ahead of several key US economic releases this week. The Flash Manufacturing PMI printed at 52.2, while the Flash Services PMI surprised to the upside at 55.2, suggesting underlying economic resilience despite slower price growth.

Key US Events Ahead

This week’s calendar features several high-impact indicators that could set the tone for dollar movement. On Tuesday, traders will watch the Richmond Manufacturing Index and CB Consumer Confidence for fresh insights into business and consumer sentiment.

The spotlight then shifts to Wednesday’s FOMC meeting, where the Fed is widely expected to cut rates by 25 basis points to 4.00%. Markets will closely follow Chair Powell’s press conference for guidance on future easing.

Later in the week, attention turns to Thursday’s Advance GDP, projected to grow 3.0%, followed by Core PCE and Employment Cost Index data on Friday.

Together, these releases will help determine whether the dollar can hold support near 98.70 or extend its recent correction amid shifting rate expectations.

US Dollar Index (DXY) – Technical Analysis

The US Dollar Index (DXY) is trading around 98.92, consolidating within a symmetrical triangle pattern as traders await a breakout signal. The 50-EMA (98.83) and 200-EMA (98.43) are flattening, reflecting indecision after recent volatility. Support lies at 98.70 and 98.38, while resistance sits near 99.14.

A clear move above the upper trendline could push prices toward 99.54, whereas a drop below 98.38 may invite selling pressure toward 98.02. The RSI near 51 suggests balanced momentum, with neither side in control.

GBP/USD Technical Analysis

The GBP/USD pair is trading near $1.3317, consolidating after failing to hold above the $1.3360 resistance. The 50-EMA ($1.3358) and 200-EMA ($1.3415) continue to slope downward, confirming a bearish structure. Support is seen at $1.3280 and $1.3247, while a move above $1.3376 could challenge the descending trendline near $1.3450.

The RSI at 43 indicates weak momentum, suggesting limited buying interest. Overall, the pair remains under pressure below the EMAs, with downside risks persisting unless buyers reclaim the $1.3360–$1.3400 zone to confirm a potential short-term reversal.

EUR/USD Technical Forecast

The EUR/USD pair is trading near $1.1625, consolidating within a symmetrical triangle pattern as price compresses between converging trendlines. The 50-EMA ($1.1627) and 200-EMA ($1.1663) are flattening, signaling indecision ahead of a potential breakout.

Immediate support lies at $1.1619, while resistance is seen at $1.1715. A break above the upper trendline could drive momentum toward $1.1778, whereas a drop below $1.1538 may invite renewed selling pressure.

The RSI near 52 shows neutral momentum, suggesting neither side holds control. In short, EUR/USD remains range-bound, and a decisive move beyond current boundaries will set the next directional trend.