US Dollar Price Forecast: Slips on Retail-Manufacturing Divergence – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) remains subdued near 99.50, reflecting sustained pressure as traders digest a fresh round of mixed economic data. While retail sales figures surprised to the upside, weakness in industrial output and lingering trade uncertainty are keeping the greenback on the back foot.

Retail Sales Beat Forecast, But Manufacturing Falters

March’s Core Retail Sales rose by 0.5% (vs 0.4% forecast), while headline Retail Sales jumped 1.4%, exceeding both the 1.3% forecast and the previous 0.2%. These stronger-than-expected numbers signal resilient consumer activity despite broader economic headwinds.

However, the manufacturing sector showed signs of strain. Industrial Production fell by 0.3%, missing the -0.2% forecast, while the Capacity Utilization Rate slipped to 77.8% from 78.2%. This contraction suggests cooling momentum in the production side of the economy.

The Business Inventories m/m reading matched expectations at 0.2%, and the NAHB Housing Market Index ticked up to 40 from 39, signaling a slight improvement in builder sentiment.

Tariffs and Trade War Risk Undermine Sentiment

Despite upbeat consumption data, the dollar continues to face downside pressure as markets remain cautious amid tariff volatility and geopolitical risks. The recent reinstatement of 145% tariffs on Chinese goods, coupled with threats of further levies on high-tech imports, have reignited fears of a renewed trade conflict.

China’s retaliatory move, increasing tariffs to 125% on U.S. imports, only added to investor anxiety. The unpredictable policy shifts have amplified safe-haven demand and undermined the dollar’s appeal.

Fed Outlook and Dollar Headwinds

While strong retail sales may temporarily cushion the dollar, core inflation remains elevated and job market data mixed. The Fed is expected to maintain a cautious tone, with markets still pricing in 100bps of rate cuts in 2025.

Unless the dollar can reclaim key technical levels, near-term sentiment remains bearish as policy uncertainty and mixed economic signals weigh on confidence.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near $99.47, slipping further after failing to hold above the $100.18 resistance (0.236 Fibonacci level).

The index remains under sustained pressure following a sharp rejection from $103.32, with price consistently trading below both the 50 EMA ($100.30) and 200 EMA ($102.15) — a bearish signal for trend continuation.

Immediate support is at $99.22, with a decisive breakdown exposing the next downside targets at $98.63 and $98.07. On the flip side, bulls must reclaim $100.78 (0.382 Fib) to shift near-term momentum. As long as DXY trades below the downtrend line and major EMAs, bearish sentiment dominates.

GBP/USD Technical Analysis

The British pound is trading at $1.3274, riding a strong uptrend within a well-defined ascending channel. Price continues to make higher highs and higher lows, supported by the rising 50 EMA ($1.3129) and 200 EMA ($1.2988), both reinforcing bullish momentum.

Immediate resistance lies at $1.3278, with a breakout targeting $1.3342, followed by the next key level at $1.3396. A sustained move above these levels would further confirm the uptrend.

On the downside, first support is at $1.3205, then $1.3138. As long as GBP/USD holds above the 50 EMA and remains inside the rising channel, the bias stays bullish.

EUR/USD Technical Forecast

The EUR/USD pair is trading around $1.1381, climbing steadily after bouncing off the 0.236 Fibonacci level at $1.1341. Price is showing resilience above both the 50 EMA ($1.1276) and the 200 EMA ($1.1052), maintaining its bullish structure.

If momentum continues, bulls may push toward the $1.1417–$1.1474 resistance zone, with $1.1474 marking a recent swing high. A breakout above this area would expose the next level near $1.1548.

On the downside, support is seen at $1.1341, followed by $1.1259 (0.382 Fib) and $1.1193 (0.5 Fib). A break below these could shift the trend short-term. As long as EUR/USD remains above the 50 EMA and the ascending trendline, the outlook favors further upside.