US Dollar Price Forecast: Slips Amid PMI Contraction and Trade Policy Uncertainty – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) edged lower during Monday’s Asian session, hovering near $99.10 amid heightened trade policy uncertainty and mixed economic data. Investors remained risk-averse as the greenback extended its recent downtrend.

Tariff Proposals and Legal Uncertainty Pressure the Dollar

Renewed selling pressure on the dollar followed comments from former President Donald Trump, who proposed doubling tariffs on steel imports from 25% to 50% during a Pennsylvania rally. While intended to bolster U.S. industry, the announcement revived fears of trade disruption.

Legal challenges to these measures further complicate the situation. A lower court initially blocked the so-called “Liberation Day” tariffs, but a U.S. appeals court recently overturned this decision, leaving future trade policy in flux.

Mixed Data and Fiscal Strains Reinforce Dollar Weakness

The latest JOLTS report showed that job openings rose to 7.39 million in April, beating forecasts. However, the ISM Manufacturing PMI slipped to 48.5, its second straight contractionary reading.

Compounding pressure is the proposed “Big Beautiful Bill,” a large tax-and-spending plan expected to significantly widen the deficit.

With protectionist risks and fiscal uncertainty mounting, analysts suggest that the “Sell America” narrative may persist, keeping the DXY subdued in the near term.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading at 99.25 on the 2-hour chart, testing a descending trendline that has consistently capped upside momentum since late May. Despite a recent recovery from the 98.21 swing low, the price has stalled just below the 200-period exponential moving average (EMA), currently at 99.65, a level that previously triggered a sharp rejection.

The 50-EMA at 99.21 is now being retested, and a failure to hold above it could renew bearish pressure. If the DXY breaks below the 98.93 minor support level, the next target becomes 98.57. A decisive close above 99.65, however, would invalidate the bearish trendline and open a path to 100.11 and 100.54.

GBP/USD Technical Analysis

GBP/USD is holding just above the $1.3501 support level after a series of tight-bodied candles signal indecision. The pair remains range-bound, oscillating between resistance at $1.3537 and dynamic support provided by the 50-period EMA at $1.3508.

The broader structure still respects the rising trendline from the May 30 low, and the 200-period EMA, located below at $1.3444, provides an additional cushion.

A clear break below $1.3501 could expose $1.3466 and $1.3444, while bulls would need a firm close above $1.3537 to regain momentum and target the $1.3564 zone next. Bias remains neutral within this tightening range.

EUR/USD Technical Forecast

The EUR/USD pair is under pressure after slipping below both the 50-period EMA ($1.1376) and the ascending trendline support, now hovering near $1.1370. The failure to hold above the $1.1389 resistance, combined with the confluence of lower highs, suggests that bearish momentum is gaining traction. Price action confirms a break of the rising structure from the May 29 low.

The next key support level lies at $1.1323, where the 200-period exponential moving average (EMA) aligns with the horizontal structure. A decisive close below this level could expose deeper levels at $1.1267. The short-term bias remains bearish as long as EUR/USD stays capped beneath $1.1389.