U.S. Dollar Loses Ground After Tariff Rollbacks and Inflation Miss – Analysis For EUR/USD, GBP/USD

Market Overview

The U.S. Dollar Index (DXY) fell to around 100.500 as traders responded to mixed signals from recent economic data and ongoing trade developments. Attention now turns to Thursday’s U.S. Producer Price Index (PPI) and Friday’s University of Michigan Consumer Sentiment report—both potential catalysts for the Federal Reserve’s next move.

Softer Inflation Data Weighs on the Dollar

April’s Consumer Price Index (CPI) came in at 2.3% year-over-year, slightly under the 2.4% forecast. Core CPI held steady at 2.8%. Monthly figures rose 0.2% for both headline and core readings.

The data reinforced views that inflationary pressures are cooling, which may encourage the Fed to delay further tightening. This expectation has weighed on the dollar.

U.S.-China Trade Deal Provides Temporary Lift

The dollar saw a brief uptick following a U.S.-China agreement that lowers tariffs significantly. The U.S. will reduce duties on Chinese goods from 145% to 30%, while China will cut its tariffs on American imports from 125% to 10%.

Markets welcomed the de-escalation but remained cautious on its lasting impact.

US Dollar Index (DXY) – Technical Analysis

The Dollar Index (DXY) is showing signs of fatigue after slipping below the 50 EMA at $100.85 and pivot support near $100.84. The drop follows a failed attempt to breach resistance at $101.97, where a descending trendline has kept bullish momentum in check.

Price is now leaning toward support at $100.10, with a break there exposing $99.61. With no 200 EMA visible, the 50 EMA breakdown is the key bearish cue.

If buyers can’t reclaim $100.84 soon, the path of least resistance is lower. Momentum has clearly shifted, and unless a reversal emerges near current levels, dollar bulls might have to wait for a fresh catalyst.

GBP/USD Technical Analysis

The British pound (GBP/USD) is punching through resistance this morning, trading around $1.3351 after breaking above its descending channel and clearing the 50 EMA at $1.3267.

This breakout also puts it comfortably above the $1.3291 pivot point, signaling a shift in momentum. If it can hold this level, the next test lies at $1.3381, followed by $1.3442.

On the downside, any pullback that slips below $1.3291 could re-expose the $1.3212 support. The structure now favors bulls as long as price stays above the pivot and continues printing higher highs.

EUR/USD Technical Forecast

EUR/USD surged above $1.1247 today, cracking a key descending trendline that’s capped upside since late April. The move above the 50 EMA at $1.1197 confirms bullish momentum is back in play, especially after clearing the $1.1181 pivot.

If the pair holds this breakout, it could retest the $1.1274 resistance zone and aim for $1.1374 next.

On the downside, any retreat toward the pivot may offer buyers a second chance, with $1.1074 as a deeper support to watch. With no major bearish divergence on the chart and momentum recovering fast, euro bulls appear back in control—at least for now.