US Dollar Forecast: Struggles Below $100 as Tariff Tensions Rise – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) is trading near $99.90, hovering close to its lowest level since 2022. The weakness comes amid rising concerns about stagflation—slowing growth paired with persistent inflation—and mixed economic data that have clouded the outlook for U.S. monetary policy.

Fed Rate Cuts Now Less Likely

Atlanta Fed President Raphael Bostic recently said the Fed still has a long way to go before reaching its 2% inflation target, suggesting that expectations for near-term rate cuts may be premature.

In March, Producer Price Index (PPI) data showed a 2.7% year-over-year increase, while core PPI came in at 3.3%, indicating underlying price pressures remain.

Sticky Inflation and Weak Consumer Confidence

Meanwhile, CPI inflation eased to 2.4%, but core CPI stayed firm at 2.8%. A small rise in jobless claims to 223,000 hints at a cooling labor market, though not enough to signal a major slowdown.

Consumer confidence also took a hit, with the University of Michigan sentiment index falling to 50.8, and one-year inflation expectations jumping to 6.7%.

Trade Tensions Add More Pressure

Geopolitical risks are also weighing on the dollar. China recently raised tariffs on U.S. goods from 84% to 125%, fueling fears of a renewed trade war. These developments have heightened global uncertainty and weakened demand for the dollar.

With inflation sticky, labor data mixed, and trade tensions escalating, investors are rethinking the timing and pace of any Fed policy changes—leaving the dollar vulnerable in the near term.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is hovering around $99.82, stabilizing after hitting a low of $99.22. A deep pullback from the $103.32 high has brought the index into oversold territory, with price now consolidating below the 0.236 Fibonacci level at $100.18.

Immediate resistance remains at $100.18, while stronger levels are seen near $100.78 (0.382 Fib) and $101.27 (0.5 Fib retracement).

GBP/USD Technical Analysis

The British pound is trading around $1.3206, continuing to climb within a well-defined ascending channel. Price action is testing resistance at $1.3217, with a breakout above this level potentially opening the door toward $1.3278 and the channel’s upper bound near $1.3342.

On the downside, support is seen at $1.3168, followed by $1.3106 and $1.3042. The 50 EMA at $1.3058 and 200 EMA at $1.2956 are rising, reinforcing the bullish short- and medium-term bias.

As long as GBP/USD stays within the channel and above the 50 EMA, bulls remain in control. A decisive break above $1.3217 could extend the rally, while a close below $1.3168 may trigger a correction.

EUR/USD Technical Forecast

The EUR/USD pair is consolidating near $1.1334 after peaking around $1.1474, with price action softening just below the 0.236 Fibonacci level at $1.1342. A break below this zone could see the pair test $1.1260 (0.382 Fib) or deeper into the $1.1194 (0.5 Fib) level, especially if momentum weakens.

The 50 EMA at $1.1248 continues to trend upward, offering dynamic support, while the 200 EMA at $1.1018 remains far below, reinforcing a broader bullish structure.