US Dollar Price Forecast: Tariff Fears Lift DXY – Are GBP/USD and EUR/USD Breaking?

Market Overview

The US Dollar gets a boost on Tuesday. At the moment, the TS Dollar Index (DXY) is at 97.80, which measures the US Dollar against 6 major currencies. Traders are watching and waiting for the US ADP Employment figures later on, as well as some comments from Fed officials coming up.

Trade Uncertainty Stifles Dollar

You might have expected the dollar to tank in the face of some not-so-pretty market news, but as things stand, the US dollar is actually on the up, possibly because investors are still looking to the dollar as a place to hide amid global uncertainty.

The problem, however, is trade tensions, compounded by new tariffs on US industries & delays in trade agreements with the EU and India, which are still putting some pressure on the currency.

US President Donald Trump’s administration is considering new tariffs on six US industries in the wake of a Supreme Court ruling that just knocked down a bunch of his second-term tariffs. These tariffs are of a different sort from the 15% global tariff announced last Saturday & will be under the 232 Section of the Trade Expansion Act of 1962.

On top of that, the European Union has just said it might put the brakes on its trade deal with the US. Similarly, India and the US just postponed a meeting to finalise a trade agreement because Washington is sorting out its tariff plans. All in all, this uncertainty is keeping investors cautious about dollar assets.

Fed Rate Speculation & Dollar Movement

It’s not just trade worries that are affecting the dollar – people are also speculating on US interest rates. Fed Governor Christopher Waller said that he supports a rate cut next March but only if the Feb labour market data is good. In fact, markets are currently putting the chances of a 25 bps cut in March at only about 5%.

Looking ahead, the US dollar might face some trouble as people expect around 50 bps of rate cuts in 2026. In contrast, the Bank of Japan is expected to raise rates by 25 bps, while the European Central Bank is expected to keep policy the same next year.

US Dollar Index Analysis: DXY Presses 98.00 as Descending Trendline Caps Gains

The US Dollar Index is currently bouncing around 97.81 on the 4 hour chart, having held up above the 0.618 Fibonacci retracement level at 97.61 – where it had been bottoming out at 95.54. And if you look at the price pattern you’ll see that higher lows have been the rule of late, with the help of a rising trendline that started late last January.

But just when you think the dollar is looking good, along comes this pesky descending trendline that’s been capping its gains at 98.00 since the high of 99.79. Try as the dollar might, it just can’t seem to get past that 98.08 level – which is its major resistance now. The 50 period moving average has just started to head upwards around 97.50, while the 200 period average is capping it hard at 97.80.

Candlesticks are telling a story of hesitation right on the 98.00 mark. If the dollar can break above 98.10 then 98.46 is in its sights, but for now 97.21 is still the main support line.

GBP/USD Analysis: Cable Compresses Near $1.3450 as Triangle Narrows

GBP/USD is currently trading at $1.3488 on the 4-hour chart and is stuck just about the support at $1.3435. The price is compressing between a line trending downwards off the $1.3868 peak and a line that’s nudging up from late-January lows – and it’s a triangle that’s really getting tight.

The 50 period moving average is now acting as resistance up at $1.3535, while the 200 period average down at $1.3550 is basically piling on to the selling pressure even more.

We’re seeing some pretty small ranges in the recent candlesticks and they’ve been getting rejected over and over again at $1.3530, suggesting that the upside is running out of steam. If we do see a break below $1.3430, it could open the door to $1.3360, while if we do manage to close above $1.3550, that would probably shift our near-term outlook upwards.

EUR/USD Analysis: Pair Tests $1.1740 Support as Trendlines Converge

The EUR/USD is playing it steady at $1.1778 on the 4 hour chart, still just above that support zone around $1.1742 where it consolidated in the past. Its currently squeezed between a trendline coming down from the $1.2050 peak and a trendline going up from those mid-Jan lows – and the result is a triangle shape that’s slowly getting tighter.

The moving average line at $1.1785 has just become a tough nut to crack for buyers, with the 50 period average at $1.1810 capping any jumps up. If you look at recent candlesticks they are really telling a story of fading momentum, with lots of small bodies and lower highs.

if the price breaks below $1.1740 then $1.1680 isn’t going to be too far away – but get back above $1.1835 and things start to look a bit more promising for the bulls.