US Dollar Forecast: Trade Tensions and Tariff Deadlines Weigh on Greenback – GBP/USD and EUR/USD Outlook

Market Overview

The US Dollar fell on Tuesday, extending its decline after US consumer confidence dropped sharply to 98.3 in February, down from 105.3 in January, marking the steepest fall since August 2021. This dip reflects growing concerns about inflation and economic stability, especially as President Trump’s tariff deadlines on Canadian and Mexican imports approach. US Treasury yields also retreated, with the 10-year yield falling to 3.85%, adding pressure on the greenback.

Today, traders are closely watching speeches from FOMC members Barkin and Bostic, as well as the US New Home Sales report, forecasted at 679K compared to the previous 698K. Additionally, Crude Oil Inventories and G20 meetings could influence market sentiment.

Market uncertainty is further fueled by Trump’s potential tariffs on copper imports, raising fears of escalating trade tensions. Given the current geopolitical risks and economic uncertainty, the US Dollar is expected to remain volatile. Investors should stay alert to policy announcements and economic data releases for directional cues.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is trading at $106.447, showing slight downward movement as it remains below the pivot point at $106.788. A downward trendline is in play, reinforcing the bearish sentiment.

If the price continues to stay below $106.788, immediate support is at $106.111, with a further decline towards $105.590 if selling pressure increases.

On the upside, a break above $106.788 would shift the sentiment to bullish, targeting resistance at $107.365 and potentially $107.853. However, the 50 EMA at $106.796 and the 200 EMA at $107.494 are acting as strong resistance levels, supporting the bearish outlook.

GBP/USD Technical Analysis

GBP/USD is trading at $1.26515, showing little movement but maintaining a cautiously bullish stance. The pair is holding just above the pivot point at $1.26497, suggesting that as long as it stays above this level, the bullish bias remains intact.

An upward move could target immediate resistance at $1.26784, with a further push towards $1.27442 if buying momentum picks up.

On the downside, a break below $1.26497 could shift sentiment to bearish, with immediate support at $1.25619 and a deeper floor at $1.25091. The 50 EMA at $1.26077 and the 200 EMA at $1.25123 are providing dynamic support, reinforcing the short-term bullish outlook.

EUR/USD Technical Forecast

EUR/USD is trading at $1.04984, up 0.01%, showing cautious optimism as it holds above the pivot point at $1.04776. This level is crucial, as staying above it keeps the bullish momentum intact. An upward trendline is also supporting the buying trend, particularly above $1.0477, reinforcing the positive sentiment.

If the price continues to climb, immediate resistance is at $1.05270, with the next target at $1.05741. On the downside, a break below $1.04776 could shift the momentum to bearish, targeting support at $1.04182.

The 50 EMA at $1.04626 and the 200 EMA at $1.04222 provide dynamic support, maintaining the short-term bullish outlook.