US Dollar Price Forecast: Will CPI Print Spark Breakout Above $98? – GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) held firm on Monday, trading near 97.85 and up about 0.20% on the day. However, upward momentum appears capped by key technical resistance zones just below the 98.00 mark. Traders are looking for fresh catalysts as the market enters a pivotal week filled with economic data and trade-related headlines.

Tariff Tensions Fuel Dollar Strength

The Dollar gained support over the weekend following aggressive trade threats from President Donald Trump. Letters were sent to more than 20 countries—including Canada, Japan, and South Korea—proposing tariffs between 15% and 50% unless new trade terms are reached.

A 35% tariff on Canadian goods was implemented, citing concerns over fentanyl and dairy trade imbalances. These developments triggered risk aversion, lifting demand for the Greenback.

Fed Caution and CPI in the Spotlight

Recent jobless claims have underscored economic resilience, with the 10-year Treasury yield stable near 4.36%. Fed officials remain split: some lean toward cuts, while others warn of delayed tariff effects. Markets are closely watching Tuesday’s June CPI release, forecast at +0.3% MoM.

A hotter print may temper rate cut bets and support the Dollar. Currently, the odds of a July cut are just 6.7%, while September remains more likely.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near $97.86, holding within a rising channel that has contained price action since early July. The index remains above both the 50- and 200-period EMAs, which are aligned near $97.58 and $97.64, respectively—offering dynamic support.

The key level to watch is $97.96, a horizontal resistance that coincides with the channel’s upper boundary. A breakout above this level could trigger upside toward $98.19 and $98.43, supported by prior structure and Fibonacci zones. On the downside, $97.66 and $97.42 serve as immediate support.

Momentum remains positive as long as the DXY holds this channel, with traders eyeing upcoming CPI data and Fed commentary to guide the next leg.

GBP/USD Technical Analysis

GBP/USD remains under pressure below $1.3515, having broken beneath a key support-turned-resistance zone marked by the highlighted demand block. The pair trades near $1.3482, extending losses from last week as sellers gain control below the descending trendline and both the 50 EMA ($1.3573) and 200 EMA ($1.3598).

Immediate downside targets lie at $1.3447 and $1.3416, with a deeper retracement possibly reaching $1.3369 if bearish momentum accelerates. Recovery requires a sustained break back above the $1.3515–$1.3570 region.

Without a catalyst, the technical outlook favors further softness, especially amid strong dollar performance and fading bullish interest in sterling. Price structure remains bearish as long as lower highs persist beneath the moving averages.

EUR/USD Technical Forecast

EUR/USD is consolidating around $1.1688, trapped within a narrowing symmetrical triangle pattern as price compresses between the 50-period EMA at $1.1710 and the 200-period EMA near $1.1676. A breakout above $1.1705 could expose $1.1729 and $1.1765 as resistance zones.

However, failure to hold above the $1.1668–$1.1650 support area may trigger a decline toward $1.1625 or even $1.1590. The lack of directional momentum reflects investor caution ahead of upcoming U.S. CPI and Eurozone economic prints.

For now, the pair is coiling within technical boundaries, and a decisive breakout—either above $1.1710 or below $1.1665—is likely to determine the next short-term trend.