US Dollar Price Forecast: Bears in Control as FOMC Statement Looms – GBP/USD and EUR/USD

Market Overview

The U.S. dollar begins the week on fragile footing as traders weigh rising geopolitical tensions alongside a packed economic calendar. Persistent instability in the Middle East continues to drive safe-haven flows into the greenback, though this support may be tested by a series of critical U.S. data releases and Wednesday’s Federal Reserve decision.

The week kicks off with Tuesday’s retail sales figures, expected to show only modest growth, 0.1% for headline sales and 0.2% for core. Any downside surprise could reinforce the view that U.S. consumer demand is slowing, putting pressure on the dollar.

All eyes will turn to Wednesday’s FOMC meeting, where the central bank is widely expected to hold rates steady at 4.50%. However, the focus will be on the Fed’s economic projections, policy statement, and Chair Powell’s press conference for signs of a pivot toward easing. Markets are currently pricing in a 62% chance of a rate cut by September, according to CME’s FedWatch tool.

Later in the week, unemployment claims and the Philly Fed Manufacturing Index will offer fresh insight into labor and industrial conditions. With risk sentiment finely balanced, the dollar’s direction will hinge on whether data justifies the growing expectations for monetary policy easing.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is slipping again after failing to reclaim the $98.36 resistance level. Price is trading around $98.07 and remains locked in a clear downtrend, capped by descending trendlines and both moving averages—50 EMA at $98.42 and 200 EMA at $99.02.

Repeated rejection from the 50 EMA reinforces bearish control, and the lower highs pattern suggests continued downside pressure. If the $97.94 support gives way, the next levels to watch are $97.60 and $97.30.

For bulls to regain traction, DXY needs a breakout above $98.70. Until then, momentum favors further weakness amid risk-off rotation and easing rate expectations.

GBP/USD Technical Analysis

GBP/USD is climbing back toward $1.3580 after bouncing off ascending trendline support near $1.3550. The pair is now trading above the 50 EMA at $1.3552, while the 200 EMA at $1.3506 continues to slope higher, reinforcing the bullish structure.

The recent rebound follows a successful defense of higher lows, keeping the broader uptrend intact. A break above $1.3598 could trigger a retest of the $1.3632 resistance, with $1.3667 next on the radar.

However, if price slips back below the trendline, the bullish case may weaken, exposing $1.3521. For now, momentum favors the upside, with bulls regaining control on intraday strength.

EUR/USD Technical Forecast

EUR/USD is regaining ground above $1.1560 after bouncing off the ascending trendline near $1.1511. The pair remains supported by the 50 EMA at $1.1508 and the 200 EMA at $1.1416, reinforcing the broader uptrend.

This recent move follows a higher low structure, suggesting bulls are still in control despite last week’s pullback from the $1.1615 resistance. A close above $1.1572 could trigger another push toward $1.1615 and possibly $1.1657.

On the downside, a break below $1.1511 would weaken the bullish case and open the door to $1.1460. So far, the recovery looks steady, but a retest of resistance will decide the next leg.