US Dollar Price Forecast: Dollar Falls as Iran Tensions Ease – GBP/USD and EUR/USD Rebound?

Published: April 01, 2026, 09:27 GMT+00:00

Key Points

• The US Dollar Index (DXY) has slipped below the $99.60 trendline support due to easing tensions between the US and Iran, reducing safe-haven demand.
• The EUR/USD pair is approaching the $1.1601 supply zone after maintaining a long-term ascending trendline.
• The GBP/USD has reclaimed the $1.3280 Fibonacci level, indicating strong buyer absorption near the $1.3160 base.

Market Overview

The US Dollar Index (DXY) is currently hovering around the 99.5-100 mark, having experienced a significant 3% increase last month, marking its strongest monthly gain since July 2025. This surge was primarily driven by investors seeking safe havens amid escalating US-Iran tensions and supply disruptions in the Strait of Hormuz.

However, the dollar has recently declined following comments from President Trump suggesting a potential de-escalation of the conflict, coupled with indications from Iran of a willingness to engage in talks. Despite this, high oil prices continue to fuel inflation expectations, prompting speculation that the Federal Reserve may maintain a tight monetary policy for an extended period.

Interest Rate Influences on Euro and Pound

The euro is facing challenges despite a slight rebound, as the European Central Bank has raised its 2026 inflation forecast to 2.6% while lowering growth expectations, raising concerns about stagflation and prompting markets to consider potential rate hikes.

Conversely, the British pound is performing better, with the Bank of England maintaining rates at 3.75% but warning of rising inflation risks, shifting market expectations towards further tightening rather than rate cuts.

Data Focus and Market Sensitivity

Upcoming US data releases are critical, as markets will compare current expectations against previous figures. Mixed signals from labor and PMI data complicate predictions for the dollar's direction, making it sensitive to any unexpected results.

Technical Analysis

US Dollar Index (DXY)

The DXY is trading near $99.49, having fallen below a rising trendline that had supported its recovery since late February. Recent bearish candles indicate strong rejection from the $100.60 resistance zone, with lower highs forming. The price has also dipped below the 50-SMA, with the 200-SMA near $99.00 now acting as a key support level. A failure to hold above $99.00 could lead to a deeper correction.

GBP/USD

The GBP/USD is currently at $1.3294, rebounding from the $1.3160 support level. A series of bullish candles with long lower wicks indicate buyer absorption. The price has reclaimed the $1.3280 zone, aligning with the 0.382 Fibonacci level, and is pushing towards the $1.3318 resistance. A sustained move above this level could open the path towards the 0.5 Fibonacci at $1.3365.

EUR/USD

The EUR/USD is trading near $1.1601, rebounding from the $1.1457 trendline support. Strong bullish candles signal renewed buying interest, pushing the price above the $1.1560 support zone. The pair is approaching a descending trendline and a key supply area between $1.1629 and $1.1667, which aligns with the 200-SMA. A breakout above this supply zone could lead to further upside.

Conclusion

The current market dynamics, influenced by geopolitical tensions and central bank policies, are creating a complex environment for the US dollar, euro, and pound. Traders should remain vigilant to upcoming data releases and technical signals that could indicate shifts in market sentiment.