US Dollar Forecast: DXY Struggles at 200-Day MA as Gold Surges Above $2,700

U.S. Dollar Faces Pressure as Euro Stays Weak, Gold Rallies

The U.S. dollar traded lower on Friday against a basket of major currencies, retreating after failing to break the 200-day moving average of 103.779 for the second consecutive session. The greenback, which threatened to take out Thursday’s low at 103.444, found its nearest downside target at a pivot of 103.144. Despite this pullback, the dollar is still poised for a third consecutive weekly gain.

Dollar Bolstered by U.S. Economic Strength and Trump Prospects

The dollar’s recent performance has been buoyed by strong U.S. economic data and growing speculation around a potential Donald Trump presidential win, which could keep interest rates elevated.

U.S. consumer spending beat expectations last month, adding to the belief that the Federal Reserve may not need to lower rates as quickly as previously expected. Meanwhile, Trump’s proposed policies on tariffs and taxes could maintain upward pressure on U.S. interest rates, adding to the dollar’s strength.

The dovish tone from the European Central Bank (ECB) has also supported the greenback. On Thursday, the ECB cut rates by 25 basis points, aligning with forecasts, as growth across the eurozone continues to weaken. The euro has dropped around 3% against the dollar over the past three weeks, nearing its lowest levels since August, with traders pricing in the likelihood of back-to-back ECB rate cuts. The euro was last up 0.16% on the day at $1.0848, having fallen 14 out of the last 16 sessions.

Geopolitical Uncertainty Boosts Safe-Haven Demand for Gold

Meanwhile, gold broke the $2,700 barrier for the first time on Friday, fueled by demand for safe-haven assets amid geopolitical tensions. Hezbollah’s escalating conflict with Israel and rising instability in the Middle East have increased investor risk aversion, driving gold’s rally. Additionally, traders are speculating on further monetary policy easing by major central banks, further supporting the metal’s upward momentum.

Gold’s more than 31% gain this year reflects broader concerns about global market instability and the appeal of safe-haven assets. Analysts expect potential resistance at $2,750, with gold already benefiting from strong speculative interest.

Market Forecast

In the short term, the U.S. dollar may continue to face pressure, particularly if it fails to hold support levels near the 103.144 pivot. However, strong U.S. data and market speculation surrounding Trump’s policies could support further gains. Traders should watch for the euro to test new lows, while gold may continue its uptrend driven by geopolitical risks.