US Dollar Price Forecast: Dollar Firms Amid Trump-Xi Talks & Truce
Published: May 22, 2026
Key Points
- The US-Iran ceasefire has been maintained for over six weeks, leading to increased tanker traffic through the Strait of Hormuz and a reduction in safe-haven demand for the US dollar.
- The US Dollar Index (DXY) has rallied to $99.28, breaking into a blue ascending channel characterized by higher highs and lows.
- EUR/USD has dropped to $1.1604 after rejecting a descending trendline, indicating bearish distribution.
- GBP/USD has successfully defended the $1.3423 support level, showing bullish rejection wicks and maintaining higher lows.
Market Analysis
On May 22, 2026, the US dollar experienced a modest strengthening following the release of April's Consumer Price Index (CPI) data, which exceeded expectations for both headline and core inflation. This data has led investors to reassess anticipated rate cuts under Chair Warsh, particularly in light of persistent inflation, especially in the housing sector. The recent ceasefire between the US and Iran has diminished the dollar's appeal as a safe-haven asset, yet the inflation data serves as a reminder that the path to potential rate cuts remains uncertain.
Dollar Index Performance
The DXY is currently trading at $99.28 on a 2-hour timeframe, having respected an ascending channel from mid-May lows. The price has crossed above the red 50-day moving average (MA) at $98.90, continuing to print higher highs and higher lows. The Relative Strength Index (RSI) is above 55, indicating good momentum without being overbought. The next resistance levels based on Fibonacci extensions are projected at $99.41 and $99.51.
Trade Idea: Buy at $99.28, target $99.51, stop at $98.97.
GBP/USD Analysis
The GBP/USD is trading at $1.3423, having tested the ascending trendline and the 0.382 Fibonacci level at $1.339. The price has shown rejection candlesticks, maintaining support near $1.339. The red MA at $1.345 acts as dynamic resistance. The RSI is around 52, indicating neutral momentum.
Trade Idea: Buy at $1.3423, target $1.348, stop at $1.339.
EUR/USD Analysis
The EUR/USD is trading at $1.1604, having rejected the descending trendline and the red MA near $1.166. The price is printing lower highs and lower lows, with bearish wicks indicating distribution. The RSI is below 48, confirming a lack of momentum.
Trade Idea: Sell at $1.1604, target $1.156, stop at $1.164.
Conclusion
Analysts suggest that the dollar's performance will continue to be influenced by labor market conditions and persistent inflation. Upcoming data releases may further impact expectations regarding rate cuts, potentially providing additional support for the dollar.