US Dollar Forecast: Trade Tariffs and Fed Policy in Focus – GBP/USD and EUR/USD

Market Overview

The US Dollar Index (DXY), which tracks the USD against a basket of six major currencies, is trading near 103.47 with modest gains. However, its upward momentum remains constrained by weak U.S. economic data and renewed tariff threats from former President Donald Trump, adding to investor uncertainty.

Despite these headwinds, Federal Reserve policy speculation and geopolitical risks continue to shape sentiment.

Weak Retail Sales Data Raises Concerns Over U.S. Economic Growth

Investors are closely watching the Federal Reserve’s updated economic projections for clues on the future of interest rates. Any hawkish shift from policymakers could provide some support for the dollar, but recent economic data paints a mixed picture.

The U.S. Census Bureau reported that Retail Sales rose just 0.2% in February, falling short of the expected 0.7% increase. This follows a downward revision of January’s figures, which now show a -1.2% decline, previously estimated at -0.9%. Year-over-year growth slowed to 3.1%, down from a revised 3.9% in January.

These figures indicate slowing consumer spending, raising concerns over economic momentum. With inflation still a key factor in the Fed’s decision-making, the weaker retail sales data has intensified speculation over potential rate cuts, which could weigh on the USD by lowering yield expectations.

Geopolitical Risks and Trade Tariffs to Influence USD Outlook

Beyond economic data, geopolitical risks remain a major driver of USD performance. On Tuesday, Donald Trump and Vladimir Putin agreed to pause strikes on Ukraine’s energy infrastructure for 30 days, but Putin refused a broader ceasefire, keeping tensions elevated.

Meanwhile, Trump confirmed that new tariffs on steel, aluminum, and automobiles will take effect on April 2 with no exemptions. These trade restrictions could fuel market volatility and slow global economic growth, adding another layer of uncertainty to the USD’s trajectory.

With the Federal Reserve decision, trade tensions, and geopolitical risks in focus, investors will be watching closely for clearer direction in the coming days.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading around $103.47, holding steady with a slight upward bias. The pivot point at $103.21 is a critical level—staying above it suggests potential upside momentum, while a drop below could accelerate losses toward $102.47 and $101.84.

The 50-day EMA at $103.55 is acting as a near-term resistance, while the 200-day EMA at $104.67 signals a broader trend ceiling. If DXY breaks above $104.07, the next resistance at $104.87 comes into focus, but failure to hold current levels could invite renewed selling pressure.

GBP/USD Technical Analysis

GBP/USD is trading near $1.2975, slightly lower on the day as traders assess the pair’s next move. The pivot point at $1.2957 is a key level—remaining above it keeps the bullish momentum intact, while a drop below could shift sentiment, exposing $1.2908 and $1.2868 as the next downside targets.

On the upside, immediate resistance stands at $1.3009, and a breakout beyond this could propel GBP/USD toward $1.3053. The 50-day EMA at $1.2665 and 200-day EMA at $1.2841 suggest a broader bullish trend, but price action remains cautious.

EUR/USD Technical Forecast

EUR/USD is hovering around $1.0918, slightly lower on the day as traders weigh economic data and the Federal Reserve’s policy stance. The pair remains in a tight range, consolidating just above the 50-day EMA at $1.0902, which is acting as near-term support.

The pivot point at $1.0892 is critical—staying above this level keeps the bullish bias intact, while a break below could invite more selling pressure toward $1.0830 and $1.0765.

On the upside, immediate resistance is at $1.0954, with a breakout potentially pushing EUR/USD toward $1.1016.