US Dollar Forecast: Can the Greenback Hold Gains Before Consumer Sentiment? – GBP/USD & EUR/USD

Market Overview

The US Dollar Index (DXY) remains firm near 104.00, buoyed by a strong labor market and easing inflation. Initial jobless claims fell to 220,000, better than the expected 225,000, while continuing claims dropped to 1.87 million, signaling resilience in employment trends. These figures provided support for the dollar, reinforcing its recent gains.

At the same time, the Producer Price Index (PPI) suggested inflationary pressures are easing. Headline PPI rose 3.2% year-over-year, cooling from 3.7% in January, while core PPI increased 3.4%, marking a slowdown from 3.8%.

The monthly core PPI even declined by 0.1%, strengthening expectations that the Federal Reserve may pivot toward rate cuts. Markets anticipate three 25 basis point rate reductions this year, potentially starting in June, which could limit further dollar strength.

Trade Policies and Economic Data to Shape Next Moves

Meanwhile, renewed trade tensions are adding uncertainty. The administration has proposed a 200% tariff on European wines and champagne, while a 25% tariff on steel and aluminum increases strain on major trading partners.

These policies could weigh on global risk sentiment and influence dollar movements.

Investors now turn to the upcoming Michigan Consumer Sentiment Index and FOMC meeting, which may provide further direction for the dollar’s outlook.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is holding steady around $104.07, inching 0.02% higher as it tests key resistance levels. The index remains above its pivot point at $103.23, signaling a bullish bias as long as this support holds. Immediate resistance is seen at $104.28, with a breakout potentially pushing DXY toward $104.92 in the near term.

On the downside, a drop below $103.23 could expose $102.71, shifting momentum bearish. The 50-day EMA at $104.28 is acting as dynamic resistance, while the 200-day EMA at $106.05 suggests long-term selling pressure.

GBP/USD Technical Analysis

GBP/USD is trading around $1.2921, edging 0.03% lower as it struggles to gain momentum above key resistance levels. The pair is holding just below the pivot point at $1.2943, indicating that bearish sentiment remains intact unless a breakout occurs.

A sustained move above this level could open the door for $1.2988, with further upside targeting $1.3053.

On the downside, immediate support sits at $1.2860, and a break below could accelerate losses toward $1.2804. The 50-day EMA at $1.2878 is offering near-term support, while the 200-day EMA at $1.2679 remains a key long-term level.

EUR/USD Technical Forecast

The EUR/USD is hovering around $1.0834, slightly down 0.02%, as traders assess the next move amid shifting market sentiment. The pair remains below the pivot point at $1.0875, signaling a bearish bias unless a breakout occurs. Immediate support at $1.0788 is critical—if breached, further declines toward $1.0715 could follow.

On the upside, resistance at $1.0949 needs to be cleared for bullish momentum to take hold. The 50-day EMA at $1.0791 is providing near-term support, while the 200-day EMA at $1.0580 indicates a long-term floor.

With Federal Reserve policy speculation and economic data influencing sentiment, traders should watch for price action around $1.0875—a break above could shift momentum toward a bullish outlook.