U.S. Dollar Tightens in Triangle as Traders Await Fed Signals – Analysis for EUR/USD, GBP/USD

Market Overview

The U.S. Dollar Index (DXY) held steady after mixed economic data on Friday. Building permits came in at 1.41M, missing the forecast of 1.45M and falling from the previous 1.48M, while housing starts matched expectations at 1.36M. Import prices rose 0.1%, beating expectations for a -0.4% decline.

However, consumer sentiment tumbled to 50.8, sharply below the forecast of 53.1, and inflation expectations surged to 7.3% from 6.5%, raising concerns for the Fed. Long-term TIC flows surprised to the upside at $161.8B, signaling strong foreign demand for U.S. assets.

Whereas, on Monday, comments are expected from FOMC members Bostic, Williams, Jefferson, and Logan, offering insights into rate cut timing and inflation concerns. The CB Leading Index is forecast to fall -0.7%, unchanged from the prior month, underscoring persistent economic softness.

In Europe, the Euro rose slightly as the trade balance beat expectations at €27.9B vs. €17.5B forecast. Italy’s trade surplus also exceeded expectations. Today’s EU Final CPI is expected to hold steady at 2.2%, with eyes on economic forecasts for growth guidance.

For the British Pound, volatility may follow remarks from MPC member Lombardelli, though no major UK data is scheduled today.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is tightening around $100.79, squeezed between a descending trendline and rising support from early May. Price remains capped below the 50-EMA at $100.85, which has consistently acted as intraday resistance.

Momentum has stalled, and the chart is littered with small-bodied candles, signaling uncertainty. This symmetrical triangle pattern suggests a breakout is imminent. A push above $101.20 could target $101.53 or even $101.97, while a break below $100.52 opens the door to $100.23 and $99.86.

With the triangle nearing its apex, the next few candles will be critical. Watch for a strong directional close to confirm the move—no need to front-run it.

GBP/USD Technical Analysis

GBP/USD is trading at $1.3300, finding support along a rising trendline from last week’s low. The pair recently reclaimed the 50-EMA at $1.3291, which had been acting as resistance, and is now trying to build momentum. Price action remains choppy and range-bound between $1.3280 and $1.3328, with no decisive breakout yet.

The higher low structure suggests buyers are holding the line, but they’ll need a clear push through $1.3328 to retest $1.3360. On the downside, if the trendline fails, $1.3280 becomes vulnerable, followed by $1.3214.

The setup favors a reactive approach—let the market resolve this tug-of-war before taking a side.

EUR/USD Technical Forecast

EUR/USD is trading at $1.1184, caught in a tightening range between declining resistance and rising support. The pair is testing the 50-EMA at $1.1183, but recent price action shows hesitation rather than strength—candles are narrow and directionless.

This kind of compression typically signals a breakout, but the bias isn’t yet clear. A move above $1.1227 would challenge the upper boundary of the structure and could target $1.1265.

On the downside, slipping below $1.1160 would break the rising support line, putting $1.1135 in focus. Traders should watch for a decisive close outside these levels rather than guessing the next move.