US Dollar Price Forecast: Rises on Venezuela Tensions – GBP/USD and EUR/USD

Market Overview

The dollar has been on a roll for the second day in a row, with the dollar index (DXY) trading around 98.60 during those early European hours. The dollar’s strength is largely due to the renewed safe-haven demand sparked by escalating tensions in Latin America.

The US has reportedly launched a major operation in Venezuela and captured President Nicolás Maduro, sending regional instability into high gear. The situation was only made more uncertain when President Trump warned that possible action could be taken in Colombia, and he went after Mexico and Cuba.

Fed Rate Cut Expectations Continue

Despite the dollar’s strength, the market is still pricing in two or more rate cuts from the Fed by the end of 2026. The Fed did lower rates by a quarter point in December 2025, setting the target range at 3.50%–3.75%, following a total of 75 basis points in cuts during the year.

Notes from the FOMC meeting suggest that more rate cuts could be on the way if inflation continues to decline. Adding to the uncertainty is the looming question of who will be the next Fed chair and what kind of policy that person will implement. All of this is keeping investors on high alert.

Meanwhile, the dollar remains strong due to the safe haven demand, but traders are closely watching key US data, including inflation figures and Friday’s Non-Farm Payrolls, which is expected to come in at 57K – a touch weaker than last month’s 64K. Weaker-than-expected job growth could weigh on the dollar and raise expectations for even more Fed rate cuts.

US Dollar Index (DXY) – Technical Analysis

The US Dollar Index (DXY) is trading near 98.70 on the 4H chart, and it’s looking like it’s going to continue its recovery within that rising channel from the low at 97.75. Price has managed to take back the 50% Fib level at 98.24 and is now testing the resistance at 98.74 – which just so happens to be where a prior support level used to be.

The 200-EMA at 99.00 is a big deal as far as upside goes, while the supports sit at 98.12 and 97.9. RSI is sitting at 58, which is a pretty good sign. The trade idea is to pick up a few dollars on the dip near 98.30 and aim for 99.20, but set a stop loss below 97.95.

GBP/USD Technical Analysis

GBP/USD is trading around $1.3425 on the 4H chart, and after failing to get past that $1.3535 resistance zone, it’s slipped back down to the midline of the rising channel. That 50-EMA at $1.3440 is now acting as a short-term resistance level.

Next key support is at $1.3358, then $1.3290. RSI is now headed for 40, which would suggest fading momentum – but not quite to the point of overbought conditions. The trade idea is to short the rally near $1.3480 and aim for $1.3350, but set a stop loss above $1.3550.

EUR/USD Technical Forecast

EUR/USD is trading at $1.1687 on the 4H chart, and after breaking below that rising channel support, it’s now testing the $1.1680-$1.1658 zone. That 200-EMA near $1.1660 is a big deal, because it’s where the next key downside support is – and it’s also where price is looking to head next.

Recent candles have been showing some pretty strong bearish bodies, which is a sign that the bulls are losing control after price rejected near $1.1805 resistance. The prior trendline break is also looking at wearing on the near-term bias, and the next support is at $1.1615. The trade idea is to short the rally near $1.1720 and aim for $1.1620, but set a stop loss above $1.1780.