US Dollar Price Forecast: DXY Wavers After NFP Surprise

Published: February 23, 2026

Key Points

• The US Dollar Index (DXY) is experiencing volatility following unexpected Non-Farm Payroll (NFP) data.
• Strong US jobs data complicates expectations for interest rate cuts, affecting dollar momentum.
• Policy uncertainty and persistent inflation pressures contribute to fragile sentiment around the US Dollar.

Market Overview

The US Dollar remains under pressure as investors grapple with fluctuating trade policies and disappointing economic indicators. The DXY has dropped below 97.50, marking a continued decline.

Impact of Trade Policy

Recent developments in US trade policy have added to the uncertainty. President Trump faced setbacks from the Supreme Court regarding his tariff powers, only to announce a new 15% global tariff plan, which has left investors confused and cautious, further weakening the Dollar.

Economic Indicators

Economic growth in the US has slowed, with Q4 2025 growth reported at an annual rate of just 1.4%, significantly below expectations. Additionally, core PCE inflation remains stubbornly high at 3.0% year-on-year, complicating the Federal Reserve's decision-making regarding interest rates.

Geopolitical Factors

Despite the challenges, geopolitical tensions, particularly regarding Iran, may provide some support for the Dollar. Reports suggest that Trump is considering military action if diplomatic efforts fail, which could shift global risk sentiment and potentially stabilize the Dollar.

Technical Analysis

US Dollar Index (DXY)

The DXY is currently hovering around 97.40, facing resistance at the 98-98.10 range. A break above this level could provide a boost, but failure to hold above 97.20 may lead to a decline towards 96.30.

GBP/USD Outlook

GBP/USD is trading at $1.3530, attempting to recover from a recent low. The pair faces resistance near $1.3580, with potential support at $1.3485 and $1.3400. A breakout above $1.3580 could lead to further gains.

EUR/USD Outlook

EUR/USD is at approximately $1.1828, building momentum after bouncing off support at $1.1740. The pair is testing resistance near $1.1860, with a potential breakout leading to targets of $1.1925 and $1.1985.

Conclusion

Investors are advised to closely monitor economic data and trade developments to gauge the future direction of the US Dollar. The current market conditions suggest a bearish bias, with potential trading strategies focusing on shorting the Dollar below key support levels.