US Dollar Forecast: Falls Below $102.50 Ahead of CPI and Fed Minutes – GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY) has dropped below the $102.50 level, showing signs of weakness. At the same time, the US 10-year Treasury yield rose to 4.36%, suggesting that investors are looking for safer returns in a more uncertain economic environment.

While higher yields often support the dollar, current market risks—especially from global trade disputes—are weighing on sentiment.

Trade Tensions Add Pressure to the Dollar

Recent US trade policy decisions are increasing uncertainty. The US plans to collect tariffs from 86 countries, a move that’s raising concerns among investors.

While some governments are asking for exceptions, the US appears to be pushing forward with the plan. This has made traders more cautious, leading to reduced demand for the US dollar.

Yields Are Rising—but So Are Concerns

The rise in Treasury yields reflects growing investor demand for protection against uncertainty. But even as yields climb, the dollar is struggling. The reason?

Traders are nervous about how trade tensions and weaker global growth might affect the US economy.

Inflation Data and Fed Minutes Could Shift the Outlook

Markets are waiting for two key updates this week: US inflation numbers and the Federal Reserve’s meeting minutes. These will help clarify if and when the Fed might cut interest rates.

Right now, there’s a 60% chance of a rate cut in May, but most traders expect the first cut to happen in July. Overall, more than 100 basis points in cuts are priced in by year-end.

Fed officials, including Chicago Fed President Austan Goolsbee, have stressed the need to wait for more data before making any changes. For now, the Fed’s next move depends heavily on how inflation trends in the coming weeks.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is hovering near $102.16, clinging just above trendline support at $102.01 after a rough slide from $103.35. Price remains decisively below both the 50 EMA and 200 EMA, suggesting sellers are still in control.

That said, the short-term uptrend line is holding—for now. If DXY breaks below $102.01, we could see a swift drop toward $101.68. On the upside, bulls need a reclaim of $102.75 to ease selling pressure.

With CPI data looming, dollar volatility could spike. Right now, it’s a waiting game—but the chart leans bearish unless that trendline provides a stronger bounce.

GBP/USD Technical Analysis

GBP/USD is hovering around $1.2802 after being rejected at the $1.2856 pivot zone—where the 200 EMA and horizontal resistance converge. The recent rebound from $1.2713 held firm at a trendline support, but the inability to break above the $1.2856 area suggests hesitation from buyers.

The 50 EMA at $1.2895 looms overhead, reinforcing the bearish pressure. If the pair fails to close above $1.2856, bears could regain control, with downside risk toward $1.2713 and $1.2635.

On the flip side, a clear break above the 200 EMA may shift sentiment and pave the way toward $1.2939. Until then, the bias leans neutral-to-bearish.

EUR/USD Technical Forecast

EUR/USD is trading just above $1.1050 after briefly testing the $1.1089 resistance, now facing pressure at the descending trendline. The pair has posted a strong rally from last week’s low near $1.0890, supported by rising bullish momentum and the broader weakness in the dollar.

Both the 50 EMA and 200 EMA sit well below current levels, confirming an underlying bullish trend. However, price action is beginning to consolidate under a confluence of resistance, including the downtrend line and horizontal supply near $1.1144.

A break above $1.1089 would confirm upside continuation, while failure to hold $1.1008 could trigger a deeper retracement toward $1.0945. For now, euro bulls are in control—but the next few candles are key.