US Dollar Forecast: DXY Slides as Trump’s Tariff Plans Shake Markets – GBP/USD and EUR/USD Outlook

Market Overview

The US Dollar Index (DXY) is experiencing volatility as markets react to President Trump’s latest tariff announcements, particularly his plan to double tariffs on Chinese imports from 10% to 20%. Investors are assessing the potential economic impact of these policies, with Trump also signaling potential penalties for currency manipulation.

Meanwhile, recent economic data has been mixed. The RCM/TIPP Economic Optimism index came in at 49.8, below expectations of 53.1, indicating weakening confidence.

Looking ahead, markets are focused on the ADP Non-Farm Employment Change report (forecast: 141K, previous: 183K) and the ISM Services PMI, expected at 52.5. These figures will be crucial in shaping expectations for Federal Reserve policy.

Traders should watch for further USD movement following Trump’s next speech and FOMC member Williams’ remarks, which may provide clues on future monetary policy amid ongoing trade tensions.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at $105.470, slipping below its pivot point of $105.795, signaling continued downside risk. The index remains under pressure as the 50-day EMA at $106.640 and 200-day EMA at $107.276 reinforce the broader bearish trend.

A double-bottom breakdown has emerged, suggesting further declines toward key support at $104.850, with additional downside potential extending to $104.192. If sellers maintain control, momentum could accelerate lower.

However, a recovery above $105.795 may challenge immediate resistance at $106.646, potentially shifting sentiment toward a bullish reversal. Traders should watch for confirmation below $104.822 to validate further downside.

GBP/USD Technical Analysis

GBP/USD is trading at $1.27996, showing resilience above its pivot point of $1.27170. The pair remains in a bullish structure, supported by the 50-day EMA at $1.26626, while the 200-day EMA at $1.25540 reinforces the broader uptrend. A bullish engulfing candlestick has emerged, signaling potential for further upside momentum.

If buyers sustain pressure, the pair could test immediate resistance at $1.28137, with extended gains toward $1.28733. However, a drop below $1.27170 could shift sentiment, triggering a move toward key support at $1.26542 and deeper downside at $1.25576.

EUR/USD Technical Forecast

EUR/USD is trading at $1.06421, maintaining a slight upward bias as it holds above its pivot point of $1.05998. The short-term trend remains bullish, supported by the 50-day EMA at $1.04836, while the 200-day EMA at $1.04368 indicates a broader recovery trend.

If buyers maintain control, the pair could test immediate resistance at $1.06975, with further upside potential toward $1.07419. However, failure to sustain momentum above $1.05998 may invite selling pressure, pushing the pair toward key support at $1.05287, with a deeper decline possible at $1.04642.

Traders should watch for confirmation above resistance for a continued rally, while a break below $1.05998 could shift sentiment, leading to a sharper selloff.