US Dollar Price Forecast: DXY Rallies in Blue Channel as Truce Holds

Published: May 25, 2026

Author: Arslan Ali

Key Points

• The US-Iran ceasefire has been maintained for over seven weeks, allowing for steady tanker traffic through the Strait of Hormuz.
• The US Dollar Index (DXY) is holding firm at $99.03, trading within a blue ascending channel characterized by higher highs and higher lows.
• EUR/USD has faced bearish pressure after rejecting resistance at $1.164, while GBP/USD has shown bullish rejection at the rising channel floor of $1.3485.

Market Overview

On May 25, 2026, the US dollar experienced a rally following a higher-than-expected Consumer Price Index (CPI) report for April, which reignited inflation concerns and diminished expectations for immediate rate cuts by the Federal Reserve. The ongoing ceasefire between the US and Iran has contributed to a normalization of oil flow through the Strait of Hormuz, but inflationary pressures remain due to rising shelter and energy costs.

DXY Analysis

The DXY is currently trading at $99.03, maintaining its position within a blue ascending channel. The price has shown resilience, holding above the $98.90 trendline and the red 50-period moving average. The Relative Strength Index (RSI) is above 52, indicating a recovery in momentum, although it remains below overbought levels. Key resistance levels are identified at $99.17 to $99.36, while $98.97 serves as a strong support level.

Trade Idea: Buy at $99.03 to $99.36, with a stop loss at $98.80.

GBP/USD Analysis

GBP/USD is trading at $1.3485, successfully defending the rising channel floor at $1.3485. The price has rejected the 0.382 Fibonacci level at $1.339, with the red moving average near $1.345 acting as dynamic resistance. The RSI is neutral, just under 50, indicating potential for further movement. The next resistance levels are clustered between $1.348 and $1.353.

Trade Idea: Buy at $1.3485 to $1.353, with a stop loss at $1.339.

EUR/USD Analysis

EUR/USD is currently at $1.1604, trading below a white descending trendline at $1.166. The price has rejected this trendline and is attempting to break out from a blue ascending trendline at $1.158. The RSI is just below 50, suggesting potential for further declines. Resistance is noted at $1.166, with significant supply at $1.162.

Trade Idea: Sell at $1.1604 to $1.156, with a stop loss at $1.164.

Conclusion

The current market dynamics, influenced by inflation data and geopolitical factors, are creating varied trading opportunities across major currency pairs. Traders should remain vigilant and responsive to upcoming economic data releases and market sentiment shifts.