US Dollar Price Forecast: Pressured by U.S.-China Trade Strain and Rate Cut Hopes — GBP/USD and EUR/USD

Market Overview

During the Asian trading session, the U.S. Dollar Index (DXY) fell below 99.00 for a second consecutive day, extending its decline as traders brace for potential Federal Reserve rate cuts and continued political uncertainty.

Fed Outlook and Government Shutdown Pressure Dollar

Market participants now expect the Federal Reserve to reduce interest rates twice this year, likely in October and December, intensifying pressure on the dollar. Meanwhile, the U.S. government shutdown, now in its third week after a funding bill failed in the Senate, has added to investor unease.

The ongoing stalemate is delaying key economic data releases and raising concerns about broader economic disruption.

Trade Tensions and Yuan Fix Add to Dollar Headwinds

Renewed U.S.-China trade friction is also weighing on sentiment. President Donald Trump’s threat to halt certain imports after China suspended soybean purchases has reignited market tensions. In response, China imposed new port fees on U.S. vessels, amplifying trade concerns.

A stronger USD/CNY reference rate set by the People’s Bank of China has further encouraged dollar selling during intraday trade.

Outlook

Investors now turn to upcoming FOMC speeches for direction, as delayed data leaves traders searching for policy cues and short-term trading opportunities.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near 98.78, down 0.12%, extending its pullback after failing to break resistance around 99.57. The index remains supported by the ascending trendline and the 200-EMA at 98.44, keeping the broader bias moderately bullish.

If buyers defend the 98.70–98.40 support zone, DXY could rebound toward 99.57 and 100.25. However, a close below 98.40 may signal further weakness toward 98.03. The RSI around 35 shows limited downside momentum, hinting at a potential near-term bounce.

GBP/USD Technical Analysis

GBP/USD is trading near $1.3366, up 0.13%, as the pair tests a descending trendline resistance after a mild rebound from $1.3230 support. The 50-EMA at $1.3339 and 200-EMA at $1.3408 are converging, indicating potential volatility ahead.

A breakout above $1.3400 could trigger a move toward $1.3452 and $1.3526, while support remains at $1.3261 and $1.3186.

The RSI near 61 reflects improving bullish momentum, suggesting buyers may attempt a short-term continuation if price sustains above $1.3330.

EUR/USD Technical Forecast

EUR/USD is trading near $1.1636, up 0.16%, rebounding from recent lows as buyers test the upper boundary of a descending channel. The pair is holding above both the 50-EMA ($1.1602) and 200-EMA ($1.1664), suggesting early signs of trend stabilization.

A breakout above $1.1660 could open the path toward $1.1721 and $1.1778, while support rests at $1.1580 and $1.1541.

The RSI near 65 signals growing bullish momentum, though overbought conditions may limit immediate upside. Holding above $1.1600 keeps the short-term bias mildly bullish.