US Dollar Price Forecast: Bearish Bias Builds on Dovish Powell Comments – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) is down for a second straight day, trading near 98.70, as investors await the Federal Reserve’s Monetary Policy Report on Friday.

Dollar weakness follows remarks from Fed Chair Jerome Powell, who acknowledged inflation remains above the 2% target but emphasized the current stance is “well-positioned” to adapt to new data.

The Fed held interest rates steady at 4.5% in June, with the FOMC projecting 50 basis points of rate cuts by the end of 2025, maintaining a cautious tone.

Geopolitical Tensions May Offer USD Support

While pressure on the Dollar persists, rising tensions with Iran could prompt safe-haven demand. U.S. officials have flagged concerns over Iran’s uranium enrichment progress, with the potential for military escalation remaining a key risk.

Traders are now focused on the upcoming policy report to Congress. A dovish tone could deepen DXY losses, while concerns about inflation or geopolitical developments may revive demand for the US dollar.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading at 98.67, attempting to stabilize after dipping below the rising channel support and briefly testing 98.53, a key horizontal level. While the index has reclaimed the 50 EMA (98.65), price still trades below the 200 EMA (98.86), suggesting short-term weakness persists.

The recent break below the rising channel and rejection near 99.10 highlight fading momentum. A sustained close below 98.53 would expose 98.28 and 98.03 as next downside targets.

On the flip side, bulls need to reclaim 99.09 to regain control and resume the broader uptrend. For now, DXY is stuck in a consolidation zone with a bearish bias unless momentum shifts.

GBP/USD Technical Analysis

GBP/USD is trading at 1.3474, attempting to reclaim ground after a recovery from the 1.3388 support level. However, the pair is showing signs of weakness near the 1.3495 resistance area, where the 200 EMA (1.3495) and descending trendline converge.

Despite briefly breaking above the 50 EMA (1.3476), the failure to sustain momentum above this cluster of resistance suggests a potential bearish rejection. If the pair turns lower from here, initial support lies at 1.3440, followed by 1.3388.

A confirmed breakout above 1.3495 would be required to invalidate the bearish bias and shift the focus toward 1.3538. Until then, the risk of renewed downside remains elevated.

EUR/USD Technical Forecast

The euro is trading at 1.1513, showing signs of recovery after breaking out of a well-defined descending channel. Price has cleared the 50 EMA (1.1503) and now sits above key resistance at 1.1490, a level that previously acted as channel support.

The breakout is supported by a bullish structure of higher lows and strong momentum candles, though the price is currently facing mild resistance near 1.1532. A sustained close above this level could open the door to 1.1568 and 1.1609.

If bulls fail to hold above 1.1490, a pullback toward 1.1453 (200 EMA) remains possible. Overall, short-term sentiment has shifted to a constructive stance, with further upside potential as long as support levels remain intact.