US Dollar Price Forecast: Risk Sentiment Shifts with Ceasefire – GBP/USD and EUR/USD Outlook?

Dollar Firms as Sticky Inflation Reinforces Cautious Fed Outlook

On June 2, 2026, the dollar continued to be buoyed by fears that inflation may run hot following the April CPI print, which exceeded expectations. Headline CPI was 3.8% and core was 4.1% in annual terms. Consequently, the market has now re-aligned expectations for the Federal Reserve, under the chairmanship of Kevin Warsh, to have significantly scaled back near-term rate cuts, reinforcing a higher-for-longer policy stance.

The stronger dollar put some pressure on the euro, while the European Central Bank continues to signal a more accommodative path amid softer Eurozone growth. The pound was trading cautiously while the Bank of England remained dependent on incoming data.

With the conditional U.S.-Iran ceasefire, now more than nine weeks old, demand for the dollar as a safe haven has reduced, although the inflation outlook has supported it. Currency traders expect further volatility as they await further Fed commentary, economic data releases and changes in market sentiment.

DXY Consolidates Near $99.06 – Blue Support Holds Firm on 2h

On the two-hour timeframe, the dollar trades at 99.06 after the mixed candles defended the blue rising trendline near 98.92 and the horizontal $99.00 support. The green rejection wick suggests the buyers are absorbing the sellers and the red 50 moving average at 99.18 is limiting the upside. The current price structure at 99.06 remains neutral after forming the lower highs 99.55 but is still preserving the higher lows. Relative strength index hovers near the neutral level of 50 without any divergence.

The volume profile places dynamic support around 98.92 and the white descending trendline is capping the upper end of the price action from the May peak near 99.35. Price structure is neutral with the support near 98.92 after bouncing from the lower lows within the short-term consolidation area following the prior breakout attempt.

Trade Idea: Buy $99.06 targeting $99.35, stop $98.92.

GBP/USD Reclaims $1.3478 – Rising Channel Floor Bounce

The British pound price trades at 1.3478 on the two-hour chart after bouncing from the white trendline 1.343 and 0.382 Fibonacci level with the green rejection wicks against the red 50 moving average 1.345 as the price action is preserving higher lows within the white rising channel with the buyers absorbing the sellers at the floor.

Relative strength index remains neutral with no divergence around the level 52 and the volume profile shows support near 1.343 as the key pivot area from 1.348 to 1.350 forming the next resistance. Price structure remains bullish from 1.343 after bouncing from the clean rising channel from the short term.

Trade Idea: Buy $1.3478 targeting $1.350, stop $1.343.

EUR/USD Tests $1.1649 – Blue Trendline Defense on 2h

As the market trades at 1.1649 on the two-hour chart after defending blue trendline and Fibonacci 38.2 level 1.162 with the green candlestick, the price encounters the red moving average resistance at 1.166 while the lower highs are visible after the recent mixed candle bodies with no immediate follow-through.

The relative strength index hovers near the neutral level of 48 without any divergence and the volume profile supports near 1.162 as the pivot with 1.166 to 1.168 forming the near-term resistance.

Price structure remains neutral while the pair is testing the floor of the blue rising channel from the short term inside the broader downtrend.

Trade Idea: Buy $1.1649 targeting $1.166, stop $1.160.