US Dollar Forecast: Climbs on Trade Developments, Key US Data Eyed – GBP/USD and EUR/USD

Market Overview

The US Dollar (USD) continued its advance, with the US Dollar Index (DXY)—which measures the USD against six major currencies—rising for a second consecutive session, trading near 99.57 during early Asian hours on Monday.

The move was fueled by signs of easing tensions between the US and China, alongside anticipation for major economic reports due later this week.

US Dollar Boosted by Trade Developments and Market Optimism

On Friday, China announced exemptions for certain US imports from its 125% tariffs, fueling optimism that a prolonged trade standoff between the world’s two largest economies could ease. Washington confirmed a partial reduction in tariffs, and President Donald Trump suggested negotiations were underway.

However, a spokesperson from the Chinese embassy refuted the claim, stating no active tariff talks were occurring and urged Washington to “avoid creating confusion.” Despite conflicting narratives, overall market sentiment stayed constructive.

US officials emphasized that broader trade discussions remain ongoing, with Agriculture Secretary Brooke Rollins noting that several agreements are “close to being finalized,” further anchoring support for the USD.

Focus Turns to Upcoming US Economic Releases

Attention now shifts to a series of key US data releases, including the preliminary Q1 GDP report, March PCE inflation data, and April’s non-farm payrolls (NFP).

These indicators are expected to offer critical insight into the health of the US economy and guide expectations for the Federal Reserve’s next policy steps.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading around $99.57, cautiously holding above a rising trendline and the pivot at $99.42. Immediate resistance is seen at $99.91, followed by $100.39, with a larger ceiling near $100.78. Support rests at $99.42, with the next downside levels at $98.86 and $98.44.

The 50 EMA sits at $99.43, offering short-term dynamic support, while the 200 EMA higher at $100.50 continues to cap broader rallies. Momentum remains neutral but slightly constructive as long as the trendline holds.

A decisive break above $99.91 could pave the way toward $100.39, while failure to defend $99.42 risks a slip back toward $98.86. Dollar bulls need confirmation soon to maintain the recent recovery attempt.

GBP/USD Technical Analysis

GBP/USD is consolidating around $1.3311, respecting the ascending trendline support near $1.3272. Immediate resistance is at $1.3347, with further upside targets at $1.3424 and $1.3494. On the downside, key supports lie at $1.3272 and $1.3204.

The 50 EMA sits slightly higher at $1.3305, acting as dynamic support, while the 200 EMA rests deeper at $1.3184, reinforcing the bullish bias. Sterling is grinding within a tightening wedge, awaiting a catalyst to break higher or lower.

A clear move above $1.3347 could unlock momentum toward $1.3424, while a slip below $1.3272 would risk a pullback to $1.3204. With key U.S. data on the horizon, volatility could spike, making current levels critical to watch.

EUR/USD Technical Forecast

EUR/USD is trading near $1.1364, pressing against the upper boundary of a descending trendline while defending support around $1.1531. Immediate resistance is seen at $1.1418, with a break above opening the door toward $1.1544. Support levels are stacked at $1.1309 and deeper at $1.1264.

The 50 EMA sits at $1.1376, while the 200 EMA at $1.1263 offers broader trend support. Price action is coiled within a tightening wedge, suggesting a breakout is approaching.

A sustained move above $1.1418 could trigger a bullish push, while a drop below $1.1531 risks a slide back to $1.1309. Traders should stay alert as the pair tests key trend barriers heading into a pivotal U.S. economic data week.